Coco Ltd manufactures mirror. The mirror measure 1/2m x 1/4m x 0.01m The mirror
ID: 2545680 • Letter: C
Question
Coco Ltd manufactures mirror. The mirror measure 1/2m x 1/4m x 0.01m The mirror are manufactured in a process which requires the following standard mix: Quantity K.G 25 30 30 15 Material PriceCost£ 30 39 30 14 21 1.2 1.3 Each mix should produce 100 square metres of mirror of 0.01m thickness, which is 800 pieces. During July 2012, 60 mixes were processed and the actual output was 46,400 pieces, from the following input Quantity KG 1600 2000 1900 850 PricefCostf 2080 2400 1710 1.5 1275 Material 1.3 0.9 Required For the month of July calculate for each material 1. price variance 2. usage variance 3. mix variance 4. yield varianceExplanation / Answer
Material Price Variance = (Standard Price – Actual Price) x Actual Quantity
Material A = (1.2 – 1.3) x 1600 = 160 (Adverse)
Material B = (1.3 – 1.2) x 2000 = 200 (Favorable)
Material C = (1 – 0.9) x 1900 = 190 (Favorable)
Material D = (1.4 – 1.5) x 850 = 85 (Adverse)
MPV = - 160 + 200 + 190 - 85 = 145 (Favorable)
Material Usage Variance = (Standard Quantity for actual Output – Actual Quantity) x Standard Price
Material A = ((25*60) – 1600) x 1.2 = 120 (Adverse)
Material B = ((30*60) – 2000) x 1.3 = 800 (Adverse)
Material C = ((30*60) – 1900) x 1 = 100 (Adverse)
Material D = ((15*60) – 850) x 1.4 = 70 (Favorable)
MUV = - 120 - 800 - 100 + 70 = 950 (Adverse)
Material Mix Variance = (Revised Standard Quantity – Actual Quantity) x Standard Price
Material A = (1587.5 – 1600) x 1.2 = 332.5 (Adverse)
Material B = (1905 – 2000) x 1.3 = 123.5 (Adverse)
Material C = (1905 – 1900) x 1 = 5 (Favorable)
Material D = (952.5 – 850) x 1.4 = 143.5 (Favorable)
MMV = - 332.5 – 123.5 + 5 + 143.5 = 307.5 (Adverse)
Material Yield Variance = Material Revised Usage Variance = (Standard Quantity - Revised Standard Quantity) x Standard Price
Material A = (1500 – 1587.5) x 1.2 = 105 (Adverse)
Material B = (1800 – 1905) x 1.3 = 136.5 (Adverse)
Material C = (1800 – 1905) x 1 = 105 (Adverse)
Material D = (900 – 952.5) x 1.4 = 73.5 (Adverse)
MYV = -105 – 136.5 – 105 – 73.5 = 420 (Adverse)
Calculation of Revised Standard Quantity = (Standard Quantity/Total Standard Quantity) x Total Actual Quantity (1600 + 2000 + 1900 + 850)
Material A = ((25*60)/6000) x 6350 = 1587.5
Material B = ((30*60)/6000) x 6350 = 1905
Material C = ((30*60)/6000) x 6350 = 1905
Material D = ((15*60)/6000) x 6350 = 952.5