Houston Corporation manufactures a wide variety of chemical compounds and liquids for industrial uses. The standard mix for producing a single batch of 1,000 liters of Rust-Off is as follows:
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There is a 20 percent loss in liquid volume during processing due to evaporation. The finished liquid is put into 5 -liter bottles for sale. Thus, the standard material cost for a 5 -liter bottle is $$\$ 78[=(\$ 15,600 \div 1,000$$ liters $) \times 5$ liters per bottle $]$.
The actual quantities of direct materials and the cost of the materials placed in production during March were as follows (materials are purchased and used at the same time):
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A total of 16,000 bottles ( 80,000 liters) were produced during March.
Required
Calculate the total direct material variance for the liquid product for the month of March and then further analyze the total variance into:
a. Materials price and efficiency variances.
b. Materials mix and yield variances.