Question

Direct Materials Mix and Yield Variances

Chypre, Inc., produces a cologne mist using a solvent mix (water and pure alcohol) and aromatic compounds (the scent base) that it sells to other companies for bottling and sale to consumers. Chypre developed the following standard cost sheet:

Direct Material	Mix		Mix Proportion	SP	Standard Cost
Solvent mix	855	gallons	0.95	$5.25	$4488.75
Aromatic compounds	45		0.05	8040.00	361800.00
Total	900	gallons			$366,288.75
Yield	810	gallons

On May 2, Chypre produced a batch of 1,100 gallons with the following actual results:

Direct Material	Actual Mix
Solvent mix	1,039.5	gallons
Aromatic compounds	60.5
Total	1,100	gallons
Yield	970	gallons

Required:

Instructions for parts 3 and 4: If a variance is zero, enter "0" and select "Not applicable" from the drop down box.

1. Calculate the yield ratio. If required, round your answer to two decimal places.

2. Calculate the standard cost per unit of the yield. If required, round your answer to the nearest cent.
$ per unit of the yield

3. Calculate the direct materials yield variance. If required, round your answer to the nearest cent.
$  

4. Calculate the direct materials mix variance. If required, round your answer to the nearest cent.
$  

Answer 1

1. Yield ratio = Standard yield/Standard input = 810/900 = 0.90

2. Standard cost per unit of yield = Standard cost / Standard yield

= $366288.75/810gallons = $ 452.21 per gallon

3.Direct Material Yield variance

=(Standard yield- Actual yield) x Standard cost per unit

= ([1100 x 0.9] - 970) x 452.21 = $9044.20

4. Direct Material Mix variance

Direct Material	Actual Mix(a)	Standard Mix(b) [Actual mix x standard mix proportion]	(c)=(a-b)	SP per unit(d)	Material Mix variance($) (c x d)
Solvent mix	1039.5	1045	-5.5	5.25	-28.875
Aromatic compounds	60.5	55	5,5	8040	44220
					44191.13 (U)