**Problem 17-52 (Algo) Materials Mix and Yield Variances (LO 17-5)**Pinnuck Products makes a liquid solvent using two grades of petroleum (Grade-1 and Grade-2). Within certain limits, the two grades can substitute for one another, so the actual mix of inputs often differs from the standard mix. The standard cost of a unit of output follows:| Input Grade | Quantity | Cost per Unit ||-------------|----------|---------------|| Grade-1 | 1.2 units | $8.55 || Grade-2 | 0.8 units | $6.55 |10,700 units were produced during August. The actual inputs purchased and used during August were as follows:| Input Grade | Total Quantity | Cost per Unit ||-------------|----------------|---------------|| Grade-1 | 15,500 units | $8.45 || Grade-2 | 8,400 units | $6.75 |**Required:**Prepare a complete materials variance analysis showing the material price variance, the materials efficiency variance, the material mix variance, and the material yield variance. *(Do not round intermediate calculations. Round "Standard mix values" to 2 decimal places. 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.)*| Input Grade | Mix Variance | Yield Variance | Efficiency Variance | Purchase Price Variance ||-------------|--------------|----------------|----------------------|--------------------------|| Grade-1 | | | | || Grade-2 | | | | |

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Description: **Problem 17-52 (Algo) Materials Mix and Yield Variances (LO 17-5)**Pinnuck Products makes a liquid solvent using two grades of petroleum (Grade-1 and Grade-2). Within certain limits, the two grades can substitute for one another, so the actual mix

1.Material Price Variance = Actual Quantity ( Standard Price - Actual Price) Grade 1= 15,500 units ( $8.55 -$8.45) = $1,550F Grade 2= 8,400 Units ( $6.55 -$6.75)= $1,680U Material price variance= 1,550F + 1,680U= 130UMaterial efficiency Variance= Standard Rate ( Standard quantity for actual output- Actual Quantity) Grade 1= 8.55 (10,700 x1.2 - 15,500) = 22,743 U Grade 2 = 6.55(10,700 x 0.80 - 8,400)= 1,048 F Material efficiency Variance= 22,743U + 1,048F = 21,695 U Material Mix Variance = Standard price(Revised Actual Quantity - Actual Quantity ) Revised Actual Quantity Particular Actual Quantity standard proportion Revised Actual Quantity Grade 1 15,500 1.2/(1.2+.8)= 0.60 14,340 (23,900 x0.60) Grade 2 8,400 0.8/(1.2+0.8)= 0.40 9,560 Total 23,900 23,900 To calculate the revised Actual Quantity we have re written the actual figures in standard proportion. Material Mix Variance= Grade 1= 8.55 ( 14,340-15,500)= 9,918 U Grade 2 = 6.55(9,560 -8,400)= 7,598 F Material Mix Variance= 9,918U +7,598F= 2,320U Grade 1 mix variance is Unfavorable because Actual Quantity is more than the Revised Actual Quantity Grade 2 mix variance is favourable because Actual Quantity is less than Revised Actual Quantity. Material yield variance= standard Rate( standard quantity for actual output - revised Actual Quantity) Grade 1 = 8.55(10,700 x 1.2 -14,340)= 12,825U Grade 2 = 6.55(10,700 x0.80-9,560)= 6550 U Material Yield variance= 12825U+6,550U= 19,375 U Revised Actual Quantity is more than standard quantity therefore material yield variance is Unfavorable.Material cost variance = Standard Rate x standard quantity - actual Rate x actual quantity Grade 1= 8.55 x 10,700 x 1.2 - 8.45 x 15,500= Garde 1 = 109,782 - 130,975= 21,193 U Grade 2 = 6.55 x 10700x 0.80 - 8,400 x 6.75 = Grade 2= 56,068 -56,700= 632U Material cost variance= 21193U+632U = 21,825 U

Business

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Problem 17-52 (Algo) Materials Mix and Yield Varlances (LO 17-5) Pinnuck Products makes a liquid solvent using two grades of petroleum (Grade-1 and Grade-2). Within certain limits, the two grades can substitute for one another, so the actual mix of inputs often differs from the standard mix. The standard cost of a unit of output follows. Input Grade Grade-1 Quantity 1.2 units Cost per Unit $8.55 Grade-2 0.8 units $6.55 10,700 units were produced during August. The actual inputs purchased and used during August were as follows. Cost per Input Grade Grade-1 Grade-2 Total Quantity 15,500 units 8, 400 units Unit $8.45 $6.75 Required: Prepare a complete materials variance analysis show the material price variance, the materials efficiency variance, the material mix variance, and the materlal yleld varlance. (Do not round Intermedlate calculatlons. Round "Standard mix values" to 2 declmal places. Indicate the effect of each varlance by selecting "F" for favorable, or "U" for unfavorable. If there Is no effect, do not sele elther optlon.) Direct Material Input Grade Mix Variance Yield Variance Efficiency Variance Purchase Price Variance

Problem 17-52 (Algo) Materials Mix and Yield Varlances (LO 17-5) Pinnuck Products makes a liquid solvent using two grades of petroleum (Grade-1 and Grade-2). Within certain limits, the two grades can substitute for one another, so the actual mix of inputs often differs from the standard mix. The standard cost of a unit of output follows. Input Grade Grade-1 Quantity 1.2 units Cost per Unit $8.55 Grade-2 0.8 units $6.55 10,700 units were produced during August. The actual inputs purchased and used during August were as follows. Cost per Input Grade Grade-1 Grade-2 Total Quantity 15,500 units 8, 400 units Unit $8.45 $6.75 Required: Prepare a complete materials variance analysis show the material price variance, the materials efficiency variance, the material mix variance, and the materlal yleld varlance. (Do not round Intermedlate calculatlons. Round "Standard mix values" to 2 declmal places. Indicate the effect of each varlance by selecting "F" for favorable, or "U" for unfavorable. If there Is no effect, do not sele elther optlon.) Direct Material Input Grade Mix Variance Yield Variance Efficiency Variance Purchase Price Variance

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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