ExpertHard2 marksMultiple Choice
ACCA · Question 22 · Standard Costing
Section A
HeavyMetal Co mixes two materials, X and Y, to produce an industrial solvent. The standard mix is 60% X and 40% Y. Standard prices are $10/kg for X and $15/kg for Y. In a period, 1,000 kg of materials were input: 500 kg of X and 500 kg of Y. What is the material mix variance?
Section A
HeavyMetal Co mixes two materials, X and Y, to produce an industrial solvent. The standard mix is 60% X and 40% Y. Standard prices are $10/kg for X and $15/kg for Y. In a period, 1,000 kg of materials were input: 500 kg of X and 500 kg of Y. What is the material mix variance?
Answer options:
A.
$500 Favorable
B.
$500 Adverse
C.
$1,000 Adverse
D.
$0
How to approach this question
Compare the Actual Quantity in Standard Mix (AQSM) to the Actual Quantity in Actual Mix (AQAM). Multiply the difference for each material by its standard price and sum them.
Full Answer
B.$500 Adverse✓ Correct
Standard mix for actual total input (1,000kg) is 600kg X and 400kg Y. Actual mix is 500kg X and 500kg Y.
X variance: (600 - 500) * $10 = $1,000 Favorable.
Y variance: (400 - 500) * $15 = $1,500 Adverse.
Net Mix Variance = $500 Adverse.
Common mistakes
Getting the sign wrong (Favorable instead of Adverse) by not noticing Y is more expensive.
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