Page 278 - PM Integrated Workbook 2018-19

Chapter 10

Example 4

Hondru operates a standard costing system.

The standard direct materials to produce 1,000 units of output is as follows:

Material Grade Input quantity Standard price per kg ($)
(kgs)
A 600 1.10

B 240 2.40

C 360 1.50
During April, the actual output of the product was 21,000 units. The actual
materials issued to production were:

Material Grade Quantity (kgs)

A 14,000
B 5,500

C 5,500

Calculate the material mix variance for each material, and in total.
Std mix Actual Actual Mix Std Mix
material usage at variance cost variance
usage standard (Kgs) /kg ($) ($)
(kgs) mix (kgs)
A 600/1200 14,000 12,500 1,500 A 1.10 1,650 A

B 240/1200 5,500 5,000 500 A 2.40 1,200 A
C 360/1200 5,500 7,500 2,000 F 1.50 3,000 F

25,000 25,000 0 – 150 F

The favourable mix variance is due to more of materials A and B being used in
place of material C.

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