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 yield variance?

Question

Quizplus · Accepted Answer

To calculate material yield variance, first, we need to find out the standard quantity of materials that should have been used for actual production. 
Standard Quantity of Material A = 30.25 gallons x 500 drums = 15,125 gallons
Standard Quantity of Material B = 24.75 gallons x 500 drums = 12,375 gallons
Total Standard Quantity of Material Used = 27,500 gallons

Actual Quantity of Material Used = 10,716 gallons + 17,484 gallons = 28,200 gallons

Material Yield Variance = Standard Quantity of Material - Actual Quantity of Material x Standard Price per unit
= 27,500 - 28,200 x $1.25
= $875 U
Therefore, the total material yield variance is $875 U. Option A is the correct answer.

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