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

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