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
|
|
January |
February |
|
Output(tonnes) |
900 |
765 |
|
|
|
|
|
Material input(tones) |
|
|
|
A |
700 |
480 |
|
B |
360 |
360 |
|
|
|
|
|
Price paid per tonne |
|
|
|
A |
$60 |
$60 |
|
B |
$90 |
$90 |
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)

FCCA,CA(MIA)with more than 26 years of post-qualifying working experiences. Previous working stints with one of the big accounting four, Regional GFC & Group Treasurer in a group of Malaysian and Group CFO in Singapore public listed concern.
Also author to another very popular free educational accounting cum finance blog: http://basiccollegeaccounting.com under the branding of College Accounting Coach.
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