Question

The Shum Company makes a product, Z, from two materials: X and Y. The standard prices and quantities are as follows:

	X			Y
Price per pound	$	6.0		$	9
Pounds per unit of product Z		9.0			6

In May, 20,000 units of Z were produced by Shum Company, with the following actual prices and quantities of materials used:

	X			Y
Price per pound	$	24.70		$	27.40
Pounds used		197,000			152,000

What is the total direct materials mix variance for May? (Do not round intermediate calculations.)

Answer 1

Material mix variance = (Actual units used at standard mix - Actual Units used at actual mix) * Standard Unit Price

Actual Units used at standard mix

Total Pounds used = 197,000 + 152,000 = 349,000

X = 349,000 pounds * 9 / 15 = 209,400

Y = 349,000 pounds * 6 / 15 = 139,600

Actual Units at Actual Mix

X = 197,000

Y = 152,000

Standard unit price

X = $6.0 per pound

Y = $9.0 per pound

Material Mix Variance

Materials	Variance
X	(209,400 - 197,000) * $6.0 = $74,400 Favorable
Y	(139,600 - 152,000) * $9.0 = $111,600 Unfavorable
Material Mix Variance	$74,400 - $111,600 = $37,200 Unfavorable

Material Mix Variance = $37,200 Unfavorable

All the best...