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14-36(20–25 min.)Direct materials efficiency, mix and yield variances

(Chapter Appendix).

1 & 2.Actual total quantity of all inputs used and actual input mix percentages for each input are as follows:

Chemical

Actual Quantity

Actual Mix Percentage

Echol

Protex

Benz

CT-40

Total

24,080

15,480

36,120

10,320

86,000

24,080 ÷ 86,000=0.28

15,480 ÷ 86,000=0.18

36,120 ÷ 86,000=0.42

10,320 ÷ 86,000=0.12

1.00

Budgeted total quantity of all inputs allowed and budgeted input mix percentages for each input are as follows:

Chemical

Budgeted Quantity

Budgeted Mix Percentage

Echol

Protex

Benz

CT-40

Total

25,200

16,800

33,600

8,400

84,000

25,200 ÷ 84,000=0.30

16,800 ÷ 84,000=0.20

33,600 ÷ 84,000=0.40

8,400 ÷ 84,000=0.10

1.00

Solution Exhibit 14-36 presents the total direct materials efficiency, yield, and mix variances for August 2003.

Total direct materials efficiency variance can also be computed as:

##### =  ×

Echol=(24,080  –  25,200) × \$0.20=\$224 F

Protex=(15,480  – 16,800)  × \$0.45=594 F

Benz=(36,120  – 33,600)  × \$0.15=378 U

CT40=(10,320  –   8,400)  × \$0.30=  576 U

Total direct materials efficiency variance\$136 U

The total direct materials yield variance can also be computed as the sum of the direct materials yield variances for each input:

=

×

×

Echol=(86,000 – 84,000)× 0.30 × \$0.20 = 2,000 × 0.30 × \$0.20=\$120 U

Protex=(86,000 – 84,000)× 0.20 × \$0.45 = 2,000 × 0.20 × \$0.45=180 U

Benz=(86,000 – 84,000)× 0.40 × \$0.15 = 2,000 × 0.40 × \$0.15=120 U

CT40=(86,000 – 84,000)× 0.10 × \$0.30 = 2,000 × 0.10 × \$0.30=60 U

Total direct materials yield variance\$480 U

14-50

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