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Question - Smoothie Plc, a fruit juice manufacturer, has determined the following standard cost details for the three ingredients that are blended together to make their tropical fruit drink:
Standard cost per litre of tropical fruit drink:
£
0.50 litres of apple juice @ £0.55 per litre
0.275
0.30 litres of pineapple juice @ £1.20 per litre
0.36
0.25 litres of mango juice @ £0.80 per litre
0.20
1.05
0.835
Actual data for December 200X was as follows: Input data for 1,650,000 litres output of tropical fruit drink:
Raw materials used
Apple
Pineapple
Mango
Quantity (000s litres)
1,072
412
396
Cost (£000s)
510
520
310
Given the perishable nature of raw materials, Smoothie Plc does not hold any stock of ingredients.
Required -
1. Calculate the individual material mix variances and the total material yield variance for December 200X.
2. Comment on the usefulness to management of individual material mix variances and the yield variance.
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