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vibrant paint co manufactures and sells paints. Business unit A of the company manufactures a paint called micra. micra uses three key materials r, s and t.
At the end of period 1, a total material cost variance of 4900 adverse was correctly recorded for micra.
The following information relates for period 1:
Material Standard cost per litre Actual cost per litre Actual usage (litres)
r 63 62 1900
s 50 51 2800
t 45 48 1300
The standard ratio of mixing material r, material s and material t is 30 : 50 : 20
The material price variance has been calculated as 4800 adverse.
What is the total material yield variance?
How to calculate the standard mix for standard total from the above information. Is it correct to calculate it by dividing 1900 by 100 and multiplying by 30, dividing 2800 by 100 and multiplying by 50, dividing 1300 by 100 and multiplying by 20 and then adding them up to arrive at the standard total.We do not need the standard mix for the standard total.
We know the total cost variance and the total price variance, so we know that the usage variance is $100 adverse. Given that this is the total of the mix variance plus the yield variance, then if we calculate the mix variance then the yield variance will be the remainder of the usage variance.
For the mix variance we compare the actual mix with the standard mix for the actual total input of 6,000 litres, costing in both cases at the standard cost per litre.
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