Plano Products manufactures a wide variety of chemical compounds and liquids for industrial uses. The standard mix
Question:
There is a standard 20 percent loss in liquid volume during processing due to evaporation. The finished liquid is put into 10-liter containers for sale. Thus, the standard material cost for a 10-liter container is $198 [= ($1,980 ÷ 100 liters) à 10 liters per container].
The actual quantities of direct materials and the cost of the materials placed in production during September were as follows (materials are purchased and used at the same time):
A total of 8,000 containers (80,000 liters) were produced during September.
Required
Calculate the total direct material variance for the liquid product for the month of September and then further analyze the total variance into:
a. Materials price and efficiency variances.
b. Materials mix and yield variances.
Step by Step Answer:
Fundamentals of Cost Accounting
ISBN: 978-1259565403
5th edition
Authors: William Lanen, Shannon Anderson, Michael Maher