# Question

Davis Division uses three secret materials—A, B, and C—to produce its product, called Corzon. The materials are mixed in the following standard proportions to yield 100 litres of Corzon:

It requires 50 hours of direct labour at $20.00 per hour to produce 100 litres of Corzon. On average, the division can produce and sell 200,000 litres of Corzon per month. In a recent month, the division used the following amounts of materials and labour to produce 175,000 litres of Corzon:

Required:

1. Calculate the following materials variances for Corzon:

a. Price.

b. Quantity.

c. Mix.

d. Yield.

2. The supervisor of the Corzon product line argued that the workers were operating at standard, if not better, despite a large unfavourable labour efficiency variance of $52,500. Is the supervisor correct? Why or why not?

It requires 50 hours of direct labour at $20.00 per hour to produce 100 litres of Corzon. On average, the division can produce and sell 200,000 litres of Corzon per month. In a recent month, the division used the following amounts of materials and labour to produce 175,000 litres of Corzon:

Required:

1. Calculate the following materials variances for Corzon:

a. Price.

b. Quantity.

c. Mix.

d. Yield.

2. The supervisor of the Corzon product line argued that the workers were operating at standard, if not better, despite a large unfavourable labour efficiency variance of $52,500. Is the supervisor correct? Why or why not?

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