URGENT- Advanced Variance

[sha-bee]

The following shows the standard input and cost for 6 tonnes of output

Tonnes

M.B 2.0 @ $230 Total; $480
F.B 8.0 @ $ 110 Total ; $880
Total 10.0 Total; 1340
Yield Loss40 % (4.0) Total; 0
Expected output 6.0 Total :$1340

Actual input and output and costs are shown below:

Production: 270tonnes
Input- M.B 70 tonnes costing $16100
- F.B 430 tonnes costing $48355

Required:
Prepare Material mix and yield variance.


Please help! I'm more comfortable with formulas.

[hariharm]

Since 500 tonnes of material have beeen used (70+430), the first thing to do is determine how 500 tonnes of total material would be used in a standard input situation:

So we would have 2/10* 500 = 100 tonnes of MB @ 230 = 23,000
and 8/10* 500 = 400 tonnes of FB @ 110 = 44,000

Total standard cost 67,000

The standard yield would be 60% i.e, 300 tonnes


Based on the mix used

MB 70 tonnes @ std cost 230 = 16,100
FB 430 tonnes @ 110 = 47,300

Total @ std cost 63,400

Material mix variance 63,400 - 67,000 = 3,600 favourable


Material usage variance:

Standard Cost of each tonne of output = 1340/6 = 223.33

Expected yield for 500 tonnes of input = 300 tonnes

Actual yield = 270 tonnes

Material yield variance = 270-300 = 30* 223.33 = 6700 Unfavourable.

Hope this helps.

[sha-bee]

BIG THANKS!!