Plano Products manufactures a wide variety of chemical compounds and liquids for industrial uses. The standard mix for producing a single batch of 100 liters of its biggest selling product is as follows. Input Chemical Chem-A Chem-B Chem-C Quantity (in liters) 23 63 39 125 Input Chemical Chem-A Chem-B Chem-C Cost (per liter) $15 15 18 Quantity (in liters) 19,360 48,900 35,540 103,800 Total Cost There is a standard 20 percent loss in liquid volume during processing due to evaporation. The finished liquid is put into 13-liter containers for sale. Thus, the standard material cost for a 13-liter container is $258.96 [= ($1,992 ÷ 100 liters) x 13 liters per container]. 345 945 702 $1,992 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). Total Cost $ 284,248 732,320 988,220 $2,004,788 $ A total of 8,300 containers (107,900 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. & b. Materials price and efficiency variances and materials mix and yield variances. (Do not round intermediate calculations. Round "Standard mix values" to 3 decimal places. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Enter your answers rounded to the nearest whole number.)
Plano Products manufactures a wide variety of chemical compounds and liquids for industrial uses. The standard mix for producing a single batch of 100 liters of its biggest selling product is as follows. Input Chemical Chem-A Chem-B Chem-C Quantity (in liters) 23 63 39 125 Input Chemical Chem-A Chem-B Chem-C Cost (per liter) $15 15 18 Quantity (in liters) 19,360 48,900 35,540 103,800 Total Cost There is a standard 20 percent loss in liquid volume during processing due to evaporation. The finished liquid is put into 13-liter containers for sale. Thus, the standard material cost for a 13-liter container is $258.96 [= ($1,992 ÷ 100 liters) x 13 liters per container]. 345 945 702 $1,992 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). Total Cost $ 284,248 732,320 988,220 $2,004,788 $ A total of 8,300 containers (107,900 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. & b. Materials price and efficiency variances and materials mix and yield variances. (Do not round intermediate calculations. Round "Standard mix values" to 3 decimal places. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Enter your answers rounded to the nearest whole number.)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 25P: Taylor Company produces two industrial cleansers that use the same liquid chemical input: Pocolimpio...
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