Question

Calculating the Direct Materials Mix Variance

Mangia Pizza Company makes frozen pizzas that are sold through grocery stores. Mangia developed the following standard mix for spreading on premade pizza shells to produce 16 giant-size sausage pizzas.

Direct Material	Mix	Mix Proportion	SP	Standard Cost
Tomato sauce	9.60 lbs	0.320	$1.40	$13.44
Cheese	11.25	0.375	2.90	32.63
Sausage	9.15	0.305	2.10	19.21
Total	30.00 lbs			$65.28

Mangia put a batch of 2,000 pounds of direct materials (enough for 1,067 frozen sausage pizzas) into process. Of the total, 680 pounds were tomato sauce, 860 pounds were cheese, and the remaining 460 pounds were sausage. The actual yield was 780 pizzas.

Required:

1. Calculate the standard mix (SM) in pounds for tomato sauce, for cheese, and for sausage.

	SM
Tomato sauce	fill in the blank 1 pounds
Cheese	fill in the blank 2 pounds
Sausage	fill in the blank 3 pounds

2. Calculate the mix variance.
$fill in the blank 4   

3. Calculate the actual proportion used of tomato sauce, cheese, and sausage.

	Actual mix proportion
Tomato sauce	fill in the blank 6 %
Cheese	fill in the blank 7 %
Sausage	fill in the blank 8 %

Using the results, would the direction of the mix variance be favorable or unfavorable?

4. What if of the total 2,000 pounds of ingredients put into process, 680 pounds were tomato sauce, 680 pounds were cheese, and 640 pounds were sausage? How would that affect the mix variance?
The mix variance will be

Answer 1

1)

Standard mix in pounds
Tomato sauce = 2000 * 0.320 = 640 pounds
cheese = 2000*0.375 = 750 pounds
Sausage = 2000* 0.305 = 610 pounds

2)

Mix Variance : (Actual Mix - Std Mix)*Std Rate
Tomato sauce = (680-640)*1.40 = 56 U
cheese = (860 - 750)*2.90 = 319 U
Sausage = (460-610)*2.10 = 315 F

3)

Actual Proportion used:

Tomato sauce = 680/2000 = 34%
Cheese =860/2000 = 43%
Sausage = 460/2000 = 23%

4)

Mix Variance : (Actual Mix - Std Mix)*Std Rate
Tomato sauce = (680-640)*1.40 = 56 U
cheese = (680 - 750)*2.90 = 203 F
Sausage = (640 - 610)*2.10 = 63 U

Total Mix variance = 84 F

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