McKinney Solvents produces a wide variety products for the manufacturing industry. The standard mix for producing a single batch of100 gallons of its biggest selling product is as follows:Input ChemicalX-1X-2X-3Quantity (ingallons)22.54062.5125Input ChenlcalX-1X-2X-FCost (pergallon)$ 886354There is a standard 20 percent loss in liquid volume during processing due to evaporation. The finished liquid is put into 10-galloncontainers for sale. Thus, the standard material cost for a 10-gallon container is $787.50 [-($7.875-100 gallons) 10 gallons percontainer]The actual quantities of direct materials and the cost of the materials placed in production during March were as follows (materials arepurchased and used at the same time)Quantity (ingallons)13,15020,35030,85064,350Total Cost$ 1,9802,5203,375$ 2,875Total Cost$ 977,8001,349,7001,795,000$4,122,500*** A total of 5,190 containers (51,900 gallons) were produced during MarchRequired:Calculate the total direct material variance for the liquid product for the month of March and then further analyze the total varianceinto:Input Chemicala. and b. Materials price and efficiency variances and materials mix and yield variances.Note: Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" forunfavorable. If there is no effect, do not select either option.X-1X-264,350X-3Total$ 4,122,500Mix VarianceDirect MaterialYield VarianceEfficiency VariancePurchase Price Variance

Variance analysis : Analysis of differences between planned and actual behavior. After analyzing…

McKinney Solvents produces a wide variety products for the manufacturing industry. The standard mix for producing a single batch of 100 gallons of its biggest selling product is as follows: Input Chemical X-1 X-2 X-3 Quantity (in gallons) 22.5 40 62.5 125 Input Chemical X-1 X-2 X-3 Cost (per gallon) $ 88 63 54 There is a standard 20 percent loss in liquid volume during processing due to evaporation. The finished liquid is put into 10-gallon containers for sale. Thus, the standard material cost for a 10-gallon container is $787.50 [-($7.875-100 gallons) - 10 gallons per container] Quantity (in gallons) 13,150 20,350 30,850 64,350 The actual quantities of direct materials and the cost of the materials placed in production during March were as follows (materials are purchased and used at the same time) Total Cost $ 1,980 2,520 3,375 $7,875 Total Cost $ 977,500 1,349,700 1,795,000 $ 4,122,500 4

McKinney Solvents produces a wide variety products for the manufacturing industry. The standard mix for producing a single batch of 100 gallons of its biggest selling product is as follows: Input Chemical X-1 X-2 X-3 Quantity (in gallons) 22.5 40 62.5 125 Input Chemical X-1 X-2 X-3 Cost (per gallon) $ 88 63 54 There is a standard 20 percent loss in liquid volume during processing due to evaporation. The finished liquid is put into 10-gallon containers for sale. Thus, the standard material cost for a 10-gallon container is $787.50 [-($7.875-100 gallons) - 10 gallons per container] Quantity (in gallons) 13,150 20,350 30,850 64,350 The actual quantities of direct materials and the cost of the materials placed in production during March were as follows (materials are purchased and used at the same time) Total Cost $ 1,980 2,520 3,375 $7,875 Total Cost $ 977,500 1,349,700 1,795,000 $ 4,122,500 4

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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