Chapter 9, Problem 18E

Refer to Exercise 9.17. Chypre, Inc., purchased the amount used of each direct material input on May 2 for the following actual prices: solvent mix for $5.20 per gallon, and aromatic compound for $8,010 per gallon.

Required:

1. 1. Compute and journalize the direct materials price variances.
2. 2. Compute and journalize the direct materials usage variances.
3. 3. Offer some possible reasons for why the variances occurred.

Chypre, Inc., produces a cologne mist using a solvent mix (water and pure alcohol) and aromatic compounds (the scent base) that it sells to other companies for bottling and sale to consumers. Chypre developed the following standard cost sheet:

On May 2, Chypre produced a batch of 1,000 gallons with the following actual results:

Required:

1. 1. Calculate the yield ratio.
2. 2. Calculate the standard cost per unit of the yield. (Round to the nearest cent.)
3. 3. Calculate the direct materials yield variance. (Round to the nearest cent.)
4. 4. Calculate the direct materials mix variance. (Round to the nearest cent.)