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In Month 5, Romeo Co reported a favourable materials mix variance for the basic
tomato pizza.
Which of the following statements would explain why this variance has occurred?
A The proportion of the relatively expensive ingredients used in production was
less than the standard.
B The prices paid for the ingredients used in the mix were lower than the standard
prices.
C Each pizza used less of all the ingredients in actual production than expected.
D More pizzas were produced than expected given the level of ingredients inputI chose C, however, the correct answer is A as I thought using less of all the ingredients will surely result in favourable mix variance. This statement means all ingredients used (including both expensive and cheap ones) are less than standard. Doesn’t this make more sense than just using less expensive ingredients?
Looking forward to your response,
Iniss.The proportion of the relatively expensive ingredients used in production was less than the standard. This means that a greater proportion of cheaper ingredients were used, resulting in a favourable materials mix variance.
Using less of all the ingredients in actual production (option C) may not necessarily result in a favourable mix variance if the proportion of expensive ingredients used is still higher than the standard.
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