- This topic has 1 reply, 2 voices, and was last updated 6 years ago by
.
- Posts
I have a query regarding mix variance. Here is the questions
134 A company has a process in which the standard mix for producing 9 litres of output is as
follows:
$
4.0 litres of D at $9 per litre 36.00
3.5 litres of E at $5 per litre 17.50
2.5 litres of F at $2 per litre 5.00
Total 58.50
A standard loss of 10% of inputs is expected to occur. The actual inputs for the latest period
were:
$
4,300 litres of D at $9.00 per litre 38,700
3,600 litres of E at $5.50 per litre 19,800
2,100 litres of F at $2.20 per litre 4,620
Total 63,120
Actual output for this period was 9,100 litres.
What is the total materials mix variance?
A $2,400 (A)
B $2,400 (F)
C $3,970 (A)
D $3,970 (F)
The part where i am getting confused is about Actual Quantity, standard mix and standard loss. Shouldnt we just take 9100 and divide it with 90. Also even if we do whats the use? the other part is calculation of AQSM which should be for D material : 9/16*63120=35505 but when i see the answer its coming 36000From the cost card, they expect to buy a total of 10 litres (for every 9 litres produced) and pay a total of $58.50.
Therefore the standard cost per unit of input is 58.50/10 = $5.85 per litre.The actual total input is 4,300 + 3,600 + 2,100 = 10,000 litres, and therefore had the 10,000 litres been mixed properly then they should have cost 10,000 x $5.85 = $58,500.
However the actual input at standard cost is (4,300 x $9) + (3,600 x $5) + (2,100 x $2) = $60,900.
Therefore the mix variance is 60,900 – 58,500 = 2,400 (A).This is all explained in my free lectures on mix and yield variances. The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.
- You must be logged in to reply to this topic.