The mix variance was favourable because the actual mix contained more of the

# The mix variance was favourable because the actual

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SOLUTION EXHIBIT 7-28 Columnar Presentation of Direct Materials Efficiency, Yield, and Mix Variances for The Energy Products Company for August 2015 Flexible Budget: Budgeted Total Quantity of Actual Total Quantity Actual Total Quantity All Inputs Allowed for of All Inputs Used of All Inputs Used Actual Output Achieved  Actual Input Mix  Budgeted Input Mix  Budgeted Input Mix  Budgeted Rate  Budgeted Rate  Budgeted Rate
(1) (2) (3) Echol 86,000  0.28  \$0.22 = \$5,298 86,000  0.30  \$0.22= \$5,676 84,000  0.30  \$0.22 = \$5,544 Protex 86,000  0.18  \$0.47 = 7,276 86,000  0.20  \$0.47 = 8,084 84,000  0.20  \$0.47 = 7,896 Benz 86,000  0.42  \$0.17 = 6,140 86,000  0.40  \$0.17 = 5,848 84,000  0.40  \$0.17 = 5,712 CT-40 86,000  0.12  \$0.32 = 3,302 86,000  0.10  \$0.32 = 2,752 84,000  0.10  \$0.32 = 2,688 \$22,016 \$22,360 \$21,840 \$344 F \$520 U Total mix variance Total yield variance \$176 U Total efficiency variance F = favourable effect on operating income; U = unfavourable effect on operating income 7-29 (35 min.) Direct materials rate, efficiency, mix, and yield variances. 1. Solution Exhibit 7-29A presents the total rate variance (\$3,100 F), the total efficiency variance (\$2,760 U), and the total flexible-budget variance (\$340 F). Total direct materials rate variance can also be computed as: Tolman = (\$0.30 – \$0.32)  62,000 = \$1,240 F Golden Delicious = (\$0.28 – \$0.28)  155,000 = 0 Ribston = (\$0.22 – \$0.24)  93,000 = 1,860 F Total direct materials rate variance \$3,100 F
SOLUTION EXHIBIT 7-29A Columnar Presentation of Direct Materials Price and Efficiency Variances for Niagara Inc. for November 2015 Flexible Budget: Actual Costs (Budgeted Inputs Incurred Allowed for Actual (Actual Inputs Actual Input Outputs Achieved  Actual Rates)  Budgeted Rates  Budgeted Rates) (1) (2) (3) Tolman 62,000  \$0.30 = \$18,600 62,000  \$0.32 = \$19,840 45,000  \$0.32 = \$14,400 Golden Delicious 155,000  \$0.28 = 43,400 155,000  \$0.28 = 43,400 180,000  \$0.28 = 50,400 Ribston 93,000  \$0.22 = 20,460 93,000  \$0.24 = 22,320 75,000  \$0.24 = 18,000 \$82,460 \$85,560 \$82,800 \$3,100 F \$2,760 U Total rate variance Total efficiency variance \$340 F Total flexible-budget variance