CMA Final · Strategic Cost Management · Variance Analyses
Rohan Chemicals uses a standard mix of 60 kg of A at Rs 20 per kg and 40 kg of B at Rs 30 per kg to yield 90 kg of output. Actual input for a batch was 330 kg of A and 270 kg of B, yielding 560 kg of output. What is the material mix variance?
The mix variance is Rs 300 Adverse. This question's options do not include it.
- ARs 600 AdverseCorrect
- BRs 600 Favourable
- CRs 900 Adverse
- DRs 1,200 Adverse
Explanation
Total actual input = 600 kg. Standard mix quantities: A = 360 kg, B = 240 kg. Mix variance = (standard mix qty - actual qty) x std price. A: (360-330) x 20 = 600 F. B: (240-270) x 30 = 900 A. Net = Rs 300 Adverse. Rechecking: standard cost of standard mix = 360x20 + 240x30 = 14,400; of actual mix = 6,600 + 8,100 = 14,700; difference 300 Adverse. So the correct figure is Rs 300 Adverse, which is not listed above.
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