Davis Division uses two raw materials—X33 and Z42—to produce its product called Base 23, a chemical base for interior house paint. The materials are mixed in the following standard proportions to yield 100 litres of Base 23: Material Quantity (litres) Cost per Litre X33 80 $ 1 Z42 20 $ 5 It requires 5 hours of direct labour at $15 per hour to produce 100 litres of Base 23. On average, the division can produce and sell 20,000 litres of Base 23 per month. In a recent month, the division used the following amounts of materials and labour to produce 18,000 litres of Base 23: Material Quantity (litres) Total Actual Cost X33 16,200 $ 16,200 Z42 5,400 27,500 21,600 $ 43,700 Direct labour 1,050 hours $ 15,750 Required: 1. Calculate the following materials variances (price, quantity, mix, and yield) for Base 23: (Do not round intermediate computations. Round final computations to nearest whole dollar. Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
Davis Division uses two raw materials—X33 and Z42—to produce its product called Base 23, a chemical base for interior house paint. The materials are mixed in the following standard proportions to yield 100 litres of Base 23: Material Quantity (litres) Cost per Litre X33 80 $ 1 Z42 20 $ 5 It requires 5 hours of direct labour at $15 per hour to produce 100 litres of Base 23. On average, the division can produce and sell 20,000 litres of Base 23 per month. In a recent month, the division used the following amounts of materials and labour to produce 18,000 litres of Base 23: Material Quantity (litres) Total Actual Cost X33 16,200 $ 16,200 Z42 5,400 27,500 21,600 $ 43,700 Direct labour 1,050 hours $ 15,750 Required: 1. Calculate the following materials variances (price, quantity, mix, and yield) for Base 23: (Do not round intermediate computations. Round final computations to nearest whole dollar. Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Davis Division uses two raw materials—X33 and Z42—to produce its product called Base 23, a chemical base for interior house paint. The materials are mixed in the following standard proportions to yield 100 litres of Base 23:
| Material | Quantity (litres) | Cost per Litre | |
| X33 | 80 | $ | 1 |
| Z42 | 20 | $ | 5 |
It requires 5 hours of direct labour at $15 per hour to produce 100 litres of Base 23.
On average, the division can produce and sell 20,000 litres of Base 23 per month. In a recent month, the division used the following amounts of materials and labour to produce 18,000 litres of Base 23:
| Material | Quantity (litres) | Total Actual Cost | ||
| X33 | 16,200 | $ | 16,200 | |
| Z42 | 5,400 | 27,500 | ||
| 21,600 | $ | 43,700 | ||
| Direct labour | 1,050 | hours | $ | 15,750 |
Required:
1. Calculate the following materials variances (price, quantity, mix, and yield) for Base 23: (Do not round intermediate computations. Round final computations to nearest whole dollar. Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and "None" for no effect (i.e., zero variance).)
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