John’s Weed-B-Gone yard service sprays lawns to rid them of weeds. John mixes th
ID: 2498117 • Letter: J
Question
John’s Weed-B-Gone yard service sprays lawns to rid them of weeds. John mixes the two chemicals, Weed-X and Pest-O, in proportions depending on the climate and the particular weed problems of the season. A standard mix calls for a gallon of the mixture to combine equal parts of Weed-X and Pest-O. Weed-X has a standard cost of $7.95 per gallon and Pesto-O has a standard cost of $21.20 per gallon. Each gallon can treat 100 square yards of lawn. John expects to treat 1,020,000 square yards of lawn.
For the past season, John treated 920,000 square yards. He used 6,840 gallons of Weed-X and 5,400 gallons of Pest-O. He paid a total of $56,088 for the Weed-X and $109,080 for the Pest-O.
Compute the materials price and efficiency variances for the season. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Do not round your intermediate calculations. Round "Efficiency variances" value to 2 decimal places.)
Compute the materials mix and yield variances for the season. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).Do not round your intermediate calculations. Round your answers to 2 decimal places.)
John’s Weed-B-Gone yard service sprays lawns to rid them of weeds. John mixes the two chemicals, Weed-X and Pest-O, in proportions depending on the climate and the particular weed problems of the season. A standard mix calls for a gallon of the mixture to combine equal parts of Weed-X and Pest-O. Weed-X has a standard cost of $7.95 per gallon and Pesto-O has a standard cost of $21.20 per gallon. Each gallon can treat 100 square yards of lawn. John expects to treat 1,020,000 square yards of lawn.
Explanation / Answer
Direct Material Variances:
Standard quantity per 100 square yards
Weed – X = 0.5 gallon
Pest - O = 0.5 gallon
Direct material Quantity/Efficiency/Usage variance For WEED-X
= (Standard quantity for actual output – actual quantity) x standard price per unit of material
= (0.5 gallon/100 sq. Yard x 920000 sq. yards – 6840 gallons) x $7.95 / gallon
= (4600 gallons – 6840 gallons) x $ 7.95 / gallon
= $ 17808 Unfavourable
Direct material Quantity/Efficiency/Usage variance For PESTO - O
= (Standard quantity for actual output – actual quantity) x standard price per unit of material
= (0.5 gallon/100 sq. Yard x 920000 sq. yards – 5400 gallons) x $ 21.20 / gallon
= (4600 gallons – 5400 gallons) x $ 21.20 / gallon
= $ 16960 Unfavourable
Total direct material variance = 17808 + 16960 = $ 34768
Direct material Price Variance for WEED-X
= (Standard price – actual price)x quantity purchased
= Standard cost for actual quantity purchased – Actual Cost
= $7.95 x 6840 - $56088
= $ 1710 Unfavourable
Direct material Price Variance for PESTO - O
= (Standard price – actual price)x quantity purchased
= Standard cost for actual quantity purchased – Actual Cost
= $ 21.20 x 5400 - $ 109080
= $ 5400 Favourable
Total Direct material efficiency variance = 1710 - 5400 = 3690 Unfavourable
Material Mix variance
Total quantity of materials used = 6840 + 5400 = 12240 Gallons
Standard Mix is 1:1
Quantity of raw materials based on the standard mix:
Weed – O = 12240 / 2 = 6120 gallons
Pesto – X = 12240 / 2 = 6120 gallons
Direct Material Mix Variance = (Actual Mix quantity – Standard Mix Quantity) x Standard Price
Weed – O = (6840 – 6120) Gallons x $7.95 / gallon = $5724 Unfavourable
Pesto – X = (5400 – 6120) gallons x $ 21.20 / gallon = $15264 Favourable
Direct material Mix variance = 15264 – 5724 = $9540 Favourable
Material Yield Variance
Standard yield using 12240 gallons of the chemicals = 12240 x 100 = 1224000 sq. Yards
Actual yield = 920000 sq. Yards
Standard cost per 100 sq. Yards = cost of 0.5 gallon of Weep – X + cost of 0.5 gallon of Pesto-X = 0.5 x ($7.95 + $21.20) = $14.575
Yield variance
= (Actual Yield – standard yield) x standard cost/100 sq. Yards
= (920000 – 1224000) x $14.575 /100 sq. Yards
= $44308 Unfavourable
Checking: Material usage variance = material mix variance + material yield variance = 44308-9540 = $34768 Unfavourable
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