FX Inc. produces a product called Slime. A 3 liter package of Slime uses three substitutable inputs - Goop, Gunk, and Glop. The following is the standard cost direct material cost of these three inputs for one package of Slime: Goop 4 lb Gunk 2 lb @ $2.00/lb @ $3.00/lb @ $3.50/lb 7 lb @ $2.50/lb Glop 1 lb Recently, 1,000 packages of slime were produced using the following actual inputs and actual costs of the inputs: Goop 2,000 lb Gunk 2,000 lb Glop 2,000 lb 6,000 lb 1. 2. $ 8.00 6.00 3.50 $17.50/package of Slime $4,400 $ 6,600 $ 7,700 $18,700 Calculate the Direct material price, mix and yield variances. Explain why the mix variance is favorable or unfavorable. Be specific and use your solution in your explanation
FX Inc. produces a product called Slime. A 3 liter package of Slime uses three substitutable inputs - Goop, Gunk, and Glop. The following is the standard cost direct material cost of these three inputs for one package of Slime: Goop 4 lb Gunk 2 lb @ $2.00/lb @ $3.00/lb @ $3.50/lb 7 lb @ $2.50/lb Glop 1 lb Recently, 1,000 packages of slime were produced using the following actual inputs and actual costs of the inputs: Goop 2,000 lb Gunk 2,000 lb Glop 2,000 lb 6,000 lb 1. 2. $ 8.00 6.00 3.50 $17.50/package of Slime $4,400 $ 6,600 $ 7,700 $18,700 Calculate the Direct material price, mix and yield variances. Explain why the mix variance is favorable or unfavorable. Be specific and use your solution in your explanation
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:FX Inc. produces a product called Slime. A 3 liter package of Slime uses three
substitutable inputs - Goop, Gunk, and Glop. The following is the standard cost
direct material cost of these three inputs for one package of Slime:
Goop 4 lb
Gunk 2 lb
Glop
1 lb
7 lb
@ $2.00/lb
@ $3.00/lb
@ $3.50/lb
@ $2.50/lb
Recently, 1,000 packages of slime were produced using the following actual
inputs and actual costs of the inputs:
Goop 2,000 lb
Gunk 2,000 lb
Glop
2,000 lb
6,000 lb
1.
2.
$ 8.00
6.00
3.50
$17.50/package of Slime
$ 4,400
$ 6,600
$ 7,700
$18,700
Calculate the Direct material price, mix and yield variances.
Explain why the mix variance is favorable or unfavorable. Be specific
and use your solution in your explanation
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