Yield Variance, Kaplan TYU 9 chapter 10

Ppradeepa7y ago

Hi, Trying to work this question out by John's method and not getting the same answer as the book, I'm getting £446 F, where as the answer is 297 F. Please explain, Hondru operates a standard costing system,the standard direct materials to produce 1000units of output is as follows: A 600kg £1.10/kg B 240Kg £2.40/kg C 360kg £1.50/kg During April the actual output of the product was 21000 units. The actual materials issues to production were: A 14000KG B 5500KG C 5500Kg Calculate the material yield variance Thank you

John MoffatTutor7y ago#1

The standard total input to produce 1,000 units is 600 + 240 + 360 = 1,200 kg. Therefore for the actual output of 21,000 units, the input should have been 21,000 x 1,200/1,000 = 25,200 kg The actual total input was 25,000 kg. Compare the actual total input and the standard total input, both of them at standard mix and standard cost and the correct answer is $296 favourable. (Kaplan's answer has a rounding error, but that it not important for the exam)

Ppradeepa7y ago#2

Hi Sir, I did compare these 2 kilos, 25000 & 25200 so: A =14000*1.10= £15400 B= 5500*2.40 £13200 C= 5500*1.50 £8250 Total= £36850 Should have used 25200kg A= 25200/1.2*0.6= 12600 *1.10 £13860 B= 25200/1.2*0.24= 5040*2.40 £12096 C= 25200/1.2*0.36=7560*1.50 £11340 Total £37296 so the difference is = £37696-36850=£446 F ...i'm really confused sir, plus thanks a lot for the fast prompt reply :)

John MoffatTutor7y ago#3

But you have not done what I said in my previous reply!!! The actual input was 25,000 kg. At standard mix and standard cost, this would be: A: 25,000 x 600/1200 x $1.10 B: 25,000 x 240/1200 x $2.40 C: 25,000 x 360/1200 x $1.50 Total $37,000 Doing the same for the standard input of 25,200: A: 25,200 x 600/1200 x $1.10 B: 25,200 x 240/1200 x $2.40 C: 25,200 x 360/1200 x $1.50 Total $37,296 I think it would help you to watch the lectures again :-)

Ppradeepa7y ago#4

Oh yes, got it now,,,really appreciate it, many thanks! I will watch the lectures once again..:)

John MoffatTutor7y ago#5

You are welcome :-)

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