In: Accounting
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 Quantity Cost Total Chemical (in liters) (per liter) Cost Chem-A 22 $ 13 $ 286 Chem-B 62 14 868 Chem-C 41 20 820 125 $ 1,974 There is a standard 20 percent loss in liquid volume during processing due to evaporation. The finished liquid is put into 12-liter containers for sale. Thus, the standard material cost for a 12-liter container is $236.88 [= ($1,974 ÷ 100 liters) × 12 liters per container]. 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). Input Chemical Quantity (in liters) Total Cost Chem-A 18,560 $ 239,248 Chem-B 49,400 687,320 Chem-C 36,040 958,220 104,000 $ 1,884,788 A total of 8,200 containers (98,400 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.)
Please find below table useful to compute desired results: -
End results would be as follows: -