A company makes a product using two materials, one of which is interchangeable with a third material. The standards for producing one 200-pound batch are presented below. The last 200-pound batch was produced using 140 pounds of M and 90 pounds of O. The price of M was $0.03 per pound and the actual price of O was $0.10.
$$\begin{array} { l c c c }
& \text { Standard Quartity } & \text { Standard } & \
\text { Material } & ( \mathrm { Ibs } ) & \text { Cost/lb. } & \text { Total Cost } \
\mathrm { O } & 0 & \$ 0.10 & \$ 0 \
\mathrm { H } & 80 & 0.08 & 6.40 \
\mathrm { M } & \underline{120} & 0.02 & \underline{ 2.40} \
& \underline{200} & & \underline{ \$ 8.80}
\end{array}$$
-
What is the material mix variance?
A) $1.68.
B) $3.00.
C) $1.32.
D) $0.84.

Question

A company makes a product using two materials, one of which is interchangeable with a third material. The standards for producing one 200-pound batch are presented below. The last 200-pound batch was produced using 140 pounds of M and 90 pounds of O. The price of M was $0.03 per pound and the actual price of O was $0.10.
$$\begin{array} { l c c c } 
& \text { Standard Quartity } & \text { Standard } & \
\text { Material } & ( \mathrm { Ibs } ) & \text { Cost/lb. } & \text { Total Cost } \
\mathrm { O } & 0 & \$ 0.10 & \$ 0 \
\mathrm { H } & 80 & 0.08 & 6.40 \
\mathrm { M } &  \underline{120} & 0.02 & \underline{ 2.40} \
&  \underline{200} & & \underline{ \$ 8.80}
\end{array}$$
-
What is the material mix variance?
A) $1.68.
B) $3.00.
C) $1.32.
D) $0.84.

Quizplus · Accepted Answer

The material mix variance is the difference between the actual cost of the materials used and the standard cost of the materials that should have been used. In this case, the actual cost of the materials used is $140 * $0.03 + $90 * $0.10 = $4.20 + $9.00 = $13.20. The standard cost of the materials that should have been used is $120 * $0.02 + $80 * $0.08 = $2.40 + $6.40 = $8.80. Therefore, the material mix variance is $13.20 - $8.80 = $4.40.

A Company Makes a Product Using Two Materials, One of Which