Reference no: EM13498420

Standard Costing and Variance Analysis                  

Chemical Manufacturing Ltd makes a cleaning product known as SuperClean by mixing three materials: A, B, and C. The standard material mix and cost to produce 9 litres of SuperClean is as follows:

 

5 litres of material A at $17.00 per litre	$85.00
3 litres of material B at $15.00 per litre	$45.00
2 litres of material C at $12.00 per litre	$24.00
	$154.00

 

A standard loss of 10% of input is expected to occur.

Actual inputs used and costs incurred were as follows:

 

53,000 litres of material A at $16.90 per litre	$895,700
28,000 litres of material B at $15.30 per litre	$428,400
19,000 litres of material C at $12.20 per litre	$ 231,800
100,000 litres	$1,555,900

 

The actual output for the period was 92,700 litres of SuperClean.

Required:

1.    Calculate the price and mix variance for each material used.

2.    Calculate the total material yield and total material usage variance.

3.    Comment on your calculations to help explain what has happened to the material yield variance.