Standard Lbs Standard Material Quantity (lbs) Cost/Lb Total Cost O 0 $0.10 $0 H
ID: 2502818 • Letter: S
Question
Standard
Lbs Standard
Material
Quantity (lbs)
Cost/Lb
Total Cost
O
0
$0.10
$0
H
80
$0.08
$6.40
M
120
$0.02
$2.40
200
$8.80
A company makes a product using two materials, one of which is interchangeable with a third material. The standards for producing one 200-pound batch are presented below. The last 200-pound batch was produced using 140 pounds of M and 90 pounds of O. The price of M was $.03 per pound and the actual price of O was $.10. Is the materials mix variance favorable or unfavorable?
Standard
Lbs Standard
Material
Quantity (lbs)
Cost/Lb
Total Cost
O
0
$0.10
$0
H
80
$0.08
$6.40
M
120
$0.02
$2.40
200
$8.80
Explanation / Answer
unfavorable because the cost is increased.
0.1*90 +140*(0.03)=4.2+9=13.2
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