Question

The Shum Company makes a product, Z, from two materials: X and Y. The standard prices and quantities are as follows $5.0 $8 13.07 Price per pound Pounds per unit of product Z In May. 15,000 units of Z were produced by Shum Company, with the following actual prices and quantities of materials used Price per pound Pounds used 12.70 15.40 209,000 128000 What is the total direct materials mix variance for May? (Do not round intermediate calculations.) O $130,650 O $30150 o $30,150 O $80,400 O s50,250.

Answer 1

SOLUTION

Direct material mix variance = $30,150 thus Option B is correct.

Total raw material consumption = 209,000 + 128,000 = 337,000

Calculation of standard mix-

X	337,000*13/20	219,050
Y	337,000*7/20	117,950

Material mix variance = (Actual quantity * Standard price) - (Standard mix quantity * Standard price)

X = (209,000*$5) - (219,050*$5)

= 1,045,000 - 1,095,250 = 50,250 Unfavorable

Y = (128,000*$8) - (117,950*$8)

= $1,024,000 - $943,600 = $80,400 Favorable

Net =  50,250 Unfavorable + $80,400 Favorable = 30,150 Favorable