Question

San Francisco Corporation uses two materials in the production of its product. The materials, X and Y, have the following standards:
Material Standard Mix Standard Unit Price Standard Cost
X 3,500 units $1.00 per unit $3,500
Y 1,500 units 3.00 per unit $4,500
Yield 4,000 units

During April, the following actual production information was provided:

Material Actual Mix
X 30,000 units
Y 20,000 units
Yield 36,000 units

What is the materials usage variance?

Answer 1

Answer:

(1) Material usage variance for X: 1,500 (Favorable)

(2) Material usage variance for Y: -19,500 (Adverse)

Explanation:

Material usage variance for X:

Standard Mix for actual Yield:

= (Standard mix of material X ÷ Yield) × Yield actual mix

= (3,500 ÷ 4,000) × 36,000

=  31,500

Material Usage Variance:

= (Standard Mix for actual Yield- Actual Mix) × Standard unit price

= (31,500-30,000) × $1

= 1,500 (Favorable)

Material usage variance for Y:

Standard Mix for actual Yield:

= (Standard mix of material Y ÷ Yield) × Yield actual mix

= (1,500 ÷ 4,000) × 36,000

=  13,500

Material Usage Variance:

= (Standard Mix for actual Yield- Actual Mix) × Standard unit price

= (13,500 - 20,000) × $3

= -19,500 (Adverse)

Total = (19,500) + 1,500

        = (18,000) [Adverse]