Question

Artigas Enterprises uses two materials in the production of its product. The materials, L and M, have the following standards: Material Standard Mix Standard Unit Price Standard Cost L 1,750 units $0.50 per unit $ 875 M 750 units 1.50 per unit $1,125 Yield 2,000 units During January, the following actual production information was provided: Material Actual Mix L 15,000 units M 10,000 units Yield 18,000 units What is the materials mix variance?

Answer 1

Materials mix variance: $4,500

Step-by-step explanation:

Materials mix variance = Actual input at individual standard materials costs – Actual input at weighted average of standard materials cost

Actual Input at individual standard material cost:

Material L: 15,000 units x $0.50 = $7,500

Material M: 10,000 units x $1.50 = $15,000

Total actual input at individual standard material cost: $22,500

Actual input at weighted average of standard materials cost:

Material Standard mix at standard unit price / Yield: $2,000 / 2,000 units = $1

Actual Input at standard material cost: 18,000 units x $1 = $18,000

Materials mix variance: $22,500 - $18,000 = $4,500