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?

Transcribed Image Text:

Secret Material Quantity (litres) Cost per Litre $ 400 $ 8.00 80 A... B.. 40 30 C... $20.00