Question
In: Accounting
Stacy, Inc., produces a product using a process that allows for substitution between two materials, Alpha...
Stacy, Inc., produces a product using a process that allows for substitution between two materials, Alpha and Beta. The company has the following direct materials data for its product.
| Standard costs for one unit of output | |||||
| Alpha | 38 | units of input at | $ | 8.00 | |
| Beta | 76 | units of input at | $ | 9.50 | |
The company had the following results in June.
| Units of output produced 3,100 units | |||||
| Materials purchased and used | |||||
| Alpha | 125,800 | units at | $ | 7.20 | |
| Beta | 227,600 | units at | $ | 10.00 | |
Required:
a. Compute materials price and efficiency variances.
b. Compute materials mix and yield variances.
Solutions
Expert Solution
| Material | Standard Quantity | Standard Price | Standard Cost | Actual Qty. | Actual Price | Actual Cost | Standard Mix |
| Alpha | 117,800 (3,100*38) | $8 | $942,400 (117800*$8) | 125,800 | $7.2 | $905,760 (125,800*$7.2) | 117,800 [(117,800*353,400)/353,400] |
| Beta | 235,600 (3,100*76) | $9.5 | $2,238,200 (235,600*$9.5) | 227,600 | $10 | $2,276,000 (227,600*$10) | 235,600 [(235,600*353,400)/353,400] |
| Total | 353,400 | $3,180,600 | 353,400 | $3,181,760 | 353,400 |
Material Price Variance = Actual Quantity(Standard Price - Actual Price)
Alpha = 125,800($8-$7.2)= 125,800 *$0.8= $100,640 Favourable
Beta = 235,600($9.5-$10) = 235,600*$0.5= $117,800 Unfavourable
Total $17,160 Unfavourable ($117,800-$100,640)
Material Efficiency Variance = Standard price (Std. Qty-Actual Qty.)
Alpha = $8(117,800-125,800) = $8(8000)= $64,000 Unfavourable
Beta= $9.5 (235,600 - 227,600) = $9.5*8000= $76,000 Favourable
Total = $12,000 Favourable ($76,000-$64,000)
Material Mix Variance = Standard price (Std. Mix -Actual Qty.)
Alpha = $8(117,800-125,800) = $8*8000= $64,000 Unfavourable
Beta= $9.5 (235,600 - 227,600) = $9.5*8000= $76,000 Favourable
Total = $12,000 Favourable ($76,000-$64,000)
Material Yield Variance = Standard price (Std. Qty- Std. Mix)
Alpha = $8(117,800-117,800) = $8*0= 0
Beta= $9.5 (235,600 - 235,600) = $9.5*0= 0
Total = Nil
ekkarill92 answered 1 year agoRelated Solutions
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Stacy, Inc., produces a product using a process that allows for
substitution between two materials, Alpha and Beta. The company has
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Standard costs for
one unit of output
Alpha
40
units of input
at
$
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Beta
80
units of input at
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The company had the following results in June:
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Materials purchased
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Stacy, Inc., produces a product using a process that allows for substitution between two materials, Alpha...
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Alpha
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$
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Beta
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56
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