Question

John’s Weed-B-Gone yard service sprays lawns to rid them of weeds. John mixes the two chemicals, Weed-X and Pest-O, in proportions depending on the climate and the particular weed problems of the season. A standard mix calls for a gallon of the mixture to combine equal parts of Weed-X and Pest-O. Weed-X has a standard cost of $9.80 per gallon and Pesto-O has a standard cost of $25.20 per gallon. Each gallon can treat 100 square yards of lawn. John expects to treat 537,000 square yards of lawn.

For the past season, John treated 654,000 square yards. He used 3,500 gallons of Weed-X and 3,400 gallons of Pest-O. He paid a total of $30,450 for the Weed-X and $78,540 for the Pest-O.

Required:

a. Compute the materials price and efficiency variances for the season. (Do not round intermediate calculations. 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.)

b. Compute the materials mix and yield variances for the season. (Do not round intermediate calculations. 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.)

Answer 1

Standard Qty for Actual Production = Standard qty required per sq yard x Actual sq yard

                                                                        =1/100 x 654,000

                                                                         =6,540 gallons

Standard mix :

Weed –X = 6,540 x 50%=3,270 gallons

Weed -y =6,540 x 50%=3,270 gallons

Actual mix:

Weed –X = =3,500 gallons

Weed -y=3,400 gallons

	Standard				Actual
Material	Qty	Price	Amount		Qty	Price	Amount
Weed-X	3,250	$               9.80	$    31,850.00		3,500		$    30,450.00
Pest-O	3,250	$            25.20	$    81,900.00		3,400		$    78,540.00
Total	6,500		$ 113,750.00	Total	6,900		$ 108,990.00

Standard input for Actual output= Actual output / Standard output x Standard Mix

Weed –X=6,900/6,500 x 3,250=3,450 gallons

Weed-y =6,900/6,500 x 3,250=3,450 gallons

Material	SQSP	RSQSP	AQSP	AQAP
Weed-X	3,450 x $9.80		3,500 x $9.80
	$              33,810		$    34,300.00
Pest-O	3,450 x $25.20		3,400 x $25.20
	$              86,940		$    85,680.00
Total	$            120,750	$ 113,750.00	$ 119,980.00	$ 108,990.00

Sq = Standard input for actual output

SP= Standard Price

RSQ= Revised standard qty

AQ= Actual qty

AP= Actual Price

a)Material price variance = (Actual qty x Standard Price) – (Actual qty x Actual Price)

                                                = $ 119,980.00 - $ 119,980.00 = $    10,990.00 (F)                                           

Material usage variance =(Standard qty x Std Price)-(Actual qty x standard Price)

                                                      = $120,750 - $ 119,980.00

                                                  = $ 770.00 F

b)Material mix variance =(Revised std qty x Standard Price )- (Actual qty x standard Price)

                                           = $ 113,750.00 - $ 119,980.00

                                       = $    (6,230.00) U

Material yield variance = = (Standard qty x Std Price)- (Revised std qty x Standard Price )

      =$ 120,750 - $ 113,750.00

                                            = $      7,000.00 F