Industrial Solutions Company
Industrial Solutions Company manufactures a cleaning solvent.The company employs both skilled and unskilled workers.To produce one 55-gallon drum of solvent requires Materials A and B as well as skilled labor and unskilled labor.The standard and actual material and labor information is presented below:
Standard:
Material A: 30.25 gallons @ $1.25 per gallon
Material B: 24.75 gallons @ $2.00 per gallon
Skilled Labor: 4 hours @ $12 per hour
Unskilled Labor: 2 hours @ $ 7 per hour
Actual:
Material A: 10,716 gallons purchased and used @ $1.50 per gallon
Material B: 17,484 gallons purchased and used @ $1.90 per gallon
Skilled labor hours: 1,950 @ $11.90 per hour
Unskilled labor hours: 1,300 @ $7.15 per hour
During the current month Industrial Solutions Company manufactured 500 55-gallon drums.
Round all answers to the nearest whole dollar.
Refer to Industrial Solutions Company.What is the total material mix variance?

Question

Quizplus · Accepted Answer

To calculate the material mix variance, we need to compare the actual mix of materials used with the standard mix of materials. 
Standard Mix Cost = (30.25 x $1.25) + (24.75 x $2.00) = $76.56 
Actual Mix Cost = (10,716 x $1.50) + (17,484 x $1.90) = $56,185.20 
Material Mix Variance = Standard Mix Cost - Actual Mix Cost = $76.56 - $56,185.20 = $3,596 U (unfavorable variance, since the actual mix cost more than the standard mix) 
Therefore, the answer is B.

Industrial Solutions Company Industrial Solutions Company Manufactures a Cleaning Solvent.The Company Employs Both