Answer:
The material mix variance unfavorable.
Explanation:
This can be determined using the following 3 steps:
Step 1: Calculation of the total Standard Cost of Actual Mix of the 3 materials
Standard Cost of Actual Mix of material O = Units of material O used * Standard cost of material O = 210 * $0.10 = $21
Standard Cost of Actual Mix of material H = Units of material H used * Standard cost of material H = 0 * $0.08 = $0
Standard Cost of Actual Mix of material M = Units of material M used * Standard cost of material M = 185 * $0.02 = $3.79
Total Standard Cost of Actual Mix of the three materials = Standard Cost of Actual Mix of material O + Standard Cost of Actual Mix of material H + Standard Cost of Actual Mix of material M = $21 + $0 + $3.79 = $24.70
Step 2: Calculation of the total Standard Cost of Standard Mix of the 3 materials
Standard Cost of Standard Mix of material O = Standard Units of material O * Standard cost of material O = 0 * $0.10 = $0
Standard Cost of Standard Mix of material H = Standard Units of material H * Standard cost of material H = 125 * $0.08 = $10
Standard Cost of Standard Mix of material M = Standard Units of material M * Standard cost of material M = 75 * $0.02 = $1.50
Standard Cost of Standard Mix of the three materials = Standard Cost of Standard Mix of material O + Standard Cost of Standard Mix of material H + Standard Cost of Standard Mix of material M = $0 + $10 + $1.50 = $11.50
Step 3: Calculation of material mix variance
Material mix variance = Total Standard Cost of Actual Mix of the three materials - Standard Cost of Standard Mix of the three materials = $24.70 - $11.50 = $13.20
Since the Total Standard Cost of Actual Mix of the three materials is greater than Standard Cost of Standard Mix of the three materials (i.e. by $13.20), this implies that the material mix variance unfavorable.
