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After watching your lectures, i still did not seem to get this.
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 material yield variance?
Actual usage in standard proportions $
D = 4,000 litres at $9 per litre = 36,000
E = 3,500 litres at $5 per litre = 17,500
F= 2,500 litres at $2 per litre = 5,000
–––––––
10,000 litres 58,500
Actual usage in actual proportions
D = 4,300 litres at $9 per litre 38,700
E = 3,600 litres at $5 per litre 18,000
F = 2,100 litres at $2 per litre 4,200
–––––––
60,900
Mix variance is 58,500 – 60,900 = $2,400 Adverse A
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