Question

Direct Materials Mix and Yield Variances

Chypre, Inc., produces a cologne mist using a solvent mix (water and pure alcohol) and aromatic compounds (the scent base) that it sells to other companies for bottling and sale to consumers. Chypre developed the following standard cost sheet:

Direct Material	Mix		Mix Proportion	SP	Standard Cost
Solvent mix	760	gallons	0.95	$5.6	$4256.00
Aromatic compounds	40		0.05	8070.00	322800.00
Total	800	gallons			$327,056
Yield	744	gallons

On May 2, Chypre produced a batch of 1,150 gallons with the following actual results:

Direct Material	Actual Mix
Solvent mix	1,089.05	gallons
Aromatic compounds	60.95
Total	1,150	gallons
Yield	1,010	gallons

Required:

Instructions for parts 3 and 4: If a variance is zero, enter "0" and select "Not applicable" from the drop down box.

1. Calculate the yield ratio. If required, round your answer to two decimal places.

2. Calculate the standard cost per unit of the yield. If required, round your answer to the nearest cent.

3. Calculate the direct materials yield variance. If required, round your answer to the nearest cent.

4. Calculate the direct materials mix variance. If required, round your answer to the nearest cent.

Answer 1

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1	Yield ratio	744/800	93.00%
2	Standard cost per unit of the yield	$327,056/744	$   439.59
3	Direct materials yield variance	= (Standard yield – Actual yield)SPy
	Standard Yield (1,150*93%)	a	1,070
	Actual Yield	b	1,010
		a-b=c	60
	Standard cost per unit of the yield	d	$   439.59
	Direct materials yield variance	c*d	26155.69
4	Direct Material		AQ	SM 1,150*95% and 5%	AQ-SM	SP	(AQ – SM)SP
	Solvent mix		1089.05	1092.5	-3.45	$            5.60	$                 (19.32)
	Aromatic compounds		60.95	57.5	3.45	$   8,070.00	$           27,841.50
	Direct material mix variance						$           27,822.18	U