ACCA Applied Skills · Performance Management · Material mix and yield variances
Lyra Co's standard mix for a product is 3 parts of X at $4 per kg and 2 parts of Y at $9 per kg. In a period, 480 kg of X and 420 kg of Y were used, 900 kg in total. What is the mix variance for Material Y?
The mix variance for Y is $540 adverse. The standard mix of 900 kg includes 360 kg of Y, but 420 kg were used. The 60 kg excess is valued at the standard price of $9 per kg, and using more of the dearer material is adverse.
- A$540 adverseCorrect
- B$540 favourable
- C$300 adverse
- D$240 favourable
Explanation
The standard mix of 900 kg is 540 kg X and 360 kg Y. For Y: (420-360) x $9 = $540 adverse because more of the expensive material was used. For X: (480-540) x $4 = $240 favourable, giving a net of $300 adverse. The $300 is the total, not the Y variance.
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