Stacy, Inc., produces a product using a process that allows for substitution bet

Question

Stacy, Inc., produces a product using a process that allows for substitution between two materials, Alpha and Beta. The company has the following direct materials data for its product:

The company had the following results in June:

Required:

a. Compute materials price and efficiency variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

                                              Alpha                           Beta                 Total

Materials Price

Efficiency Variances

b. Compute materials mix and yield variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

                                 Alpha                        Beta           Total

Materials Mix

Yield Variances

Standard costs for one unit of output Alpha 56 units of input at $ 5.00 Beta 112 units of input at $ 15.50

Explanation / Answer

Production of 2,800 units should require 470,400 units of input {(2800×56)+(2800×112)}

Material purchase price variance:

Alpha:$824,000-$774,560=$49,440 F

Beta:$4,736,800-$4,859,040=$122,240 U

Total=49,440 F + $122,240 U=$72,800 U

Efficiency variance:

Alpha:$784,000-$824,000=$40,000 U

Beta: $4,860,800-$4,736,800=$124,000 F

Total=$40,000 U + $124,000 F =$84,000 F

Material mix variance:

Alpha:$784,000-$824,000=$40,000 U

Beta: $4,860,800-$4,736,800=$124,000 F

Total=$40,000 U + $124,000 F=$84,000 F

Yield variance:

Alpha:$784,000-$784,000=$0

Beta: $4,860,800-$4,860,800=$0

Total:$5,644,800-$5,644,800=$0

Actual usage was 470,400 units(164800+305,600) , so there was no yield variance.

Alpha Beta total AP×AQ 164800×$4.70=$774,560 305600×$15.90=$4,859,040 $5,633,600 SP×AQ 164,800×$5.00=$824,000 305600×$15.50=$$4,736,800 $5,560,800 SP×ASQ $5×(1/3×470400)=$784,000 $15.50×(2/3×470,400)=$4,860,800 $5,644,800 SP×SQ $5×(56×2800)=$784,000 $15.50×(112×2800)=$4,860,800 $5,644,800

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