Question

Calculate the material cost variance, material usage variance, and material mix variance from the following data:...

Calculate the material cost variance, material usage variance, and material mix variance from the following data:

Material                             

Standard

Actual

X                                           

360 units@ SR 10 each

376 units @ SR 9 each

Y                                           

280 units @ SR 8 each

304 units @ SR 9 each
Business   Accounting   
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Homework Answers

Answer #1

Material cost variance:

(SQ*SP) - (AQ-AP)

Material X : (360*10)-(376*9) = 216 (favourable)

Material Y : (280*8)-(304*9) = 496 (unfavorable)

Material usage variance

SP(SQ-AQ)

Material X : 10(360-376) = 160(unfavorable)

Material Y : 8 (280-304) = 192 (unfavorable)

Computation of standard mix (SM)

Standard mix means actual quantity in standard mixing ratio.

Total actual quantity = 584

Standard ratio = 360:376

SM :

Material X :( 584/736)*360 = 286

Material Y : (584/736)*376 = 298

Material mix variance :

SR(SM - AQ)

Material X:10(286-376) = 900(unfavorable)

Material Y: 8(298-304) = 48(unfavorable)

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