Vibrant Paints Co manufactures and sells paints. Business Unit A of the company makes a paint called Micra. Micra is made using three key materials: R, S and T.At the end of period 1, a total material cost variance of $4,900 adverse was correctly recorded for Micra.The following information relates to Micra for period 1:MaterialRSTStandard costper litre ($)63O $800 adverse5045Actual costper litre ($)625148Actual usage(litres)1,9002,8001,300The standard ratio of mixing material R, material S and material Tis 30:50:20.The material price variance for Micra has been correctly calculated as $4,800 adverse.What is the total material yield variance for Micra for period 17O $900 adverseO $800 favourableO $700 favourable

Name: Vibrant Paints Co manufactures and sells paints. Business Unit A of t
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Description: Vibrant Paints Co manufactures and sells paints. Business Unit A of the company makes a paint called Micra. Micra is made using three key materials: R, S and T.At the end of period 1, a total material cost variance of $4,900 adverse was correctly re

Formula needed to calculate :-Total material cost variance = Material price variance + Material…

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What is the total material yield variance for Micra for period 17 O $900 adverse $800 favourable O $700 favourable $800 adverse

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

Vibrant Paints Co manufactures and sells paints. Business Unit A of the company makes a paint called Micra. Micra is made using three key materials: R, S and T.
At the end of period 1, a total material cost variance of $4,900 adverse was correctly recorded for Micra.
The following information relates to Micra for period 1:
Material
R
S
T
Standard cost
per litre ($)
63
O $800 adverse
50
45
Actual cost
per litre ($)
62
51
48
Actual usage
(litres)
1,900
2,800
1,300
The standard ratio of mixing material R, material S and material Tis 30:50:20.
The material price variance for Micra has been correctly calculated as $4,800 adverse.
What is the total material yield variance for Micra for period 17
O $900 adverse
O $800 favourable
O $700 favourable

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Material Material Actual Standard Actual Standard Price Usage Total Supplier Price Price Quantity Quantity Var Var Variance Current $7.50 $7.50 25,000 24,240 $0 Alternative #1 $7.35 $7.50 25,500 24,240 $0 Alternative #2 $7.58 $7.50 24,400 24,240 $0 Standard Quantity is 2.02 components Quantity produced is 12,000 You are a plant manager and have been approached by your purchasing manager about swapping out one of your suppliers. The manager has identified a vendor who will supply a key component at a 2% discount to your current supplier. At the same time, the supervisor of the group approaches you to indicate that the current supplier is not consistently meeting tolerances. The supervisor suggests a second vendor who promises better quality. You decide to run three batches, each with a different component. Results are in the table above. Task 1 Calculate the Material Price Variance for each component. Task 2 Calculate the Material Usage Variance for each component. Task 3 Based on the…
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1
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