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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/kgDuring April the actual output of the product was 21000 units. The actual materials issues to production were:
A 14000KG
B 5500KG
C 5500KgCalculate the material yield variance
Thank you
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)
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= £36850Should 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 £37296so the difference is = £37696-36850=£446 F …i’m really confused sir, plus thanks a lot for the fast prompt reply 🙂
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 $1.50Total $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 $1.50Total $37,296
I think it would help you to watch the lectures again 🙂
Oh yes, got it now,,,really appreciate it, many thanks! I will watch the lectures once again..:)
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