Management Accounting Test Question On Standard Costing SC5

Company ABC mixes 2 materials, Material A and Material B in its production process. The following data is provided:

Standard:

Proportion:60% Material A

40% Material B

Yield: 90%

Material A $60 per tonne

Material B $90 per tonne

Required:

(i) Calculate for January:

(a) The total yield variance (5 marks)

(b) The price variance for Material B (2 marks)

(c) The usage variance for Material A (3 marks)

      (ii) Calculate for February:

                  (a) The actual cost of Material B (2 marks)

                  (b) The mixture variance of Material A (3 marks)

     (iii)  State the main benefits of the yield variance for management control ( 5 marks)