Exercise 10A-1 Mix and Yield Variances [LO8]
The Grayson Company uses standard costs to account for its production of a specialty cleaning product
called Green Clean. The standard cost of materials and direct labour to produce one bottle of Green Clean
is as follows:
Material A 1.5 litres at $0.80 per litre $ 1.20
Material B 0.5 litres at $2.00 per litre 1.00
Direct labour 0.25 hours at $10.00 per hour 2.50
Both material A and material B are added at the start of the process. Production data for June 2016 are as
follows:
a. Beginning work in process, 5,000 units, 25% complete.
b. Started during June, 18,000 units.
c. Ending work in process, 6,000 units, 60% complete.
d. No units were spoiled.
e. 28,000 litres of material A was issued to production.
f. 12,000 litres of material B was used during June.
g. Direct labour worked totalled 4,800 hours at a cost of $50,000 for the month.
Required:
Determine all of the material and labour variances possible from the preceding data for the month of June.
(Indicate the effect of each variance by selecting "F" for favourable, "U" for unfavourable, and
"None" for no effect (i.e., zero variance).)
Material Variances
Mix Variance A
Mix Variance B
Yield Variance A
Yield Variance B
Labour Variances
Rate Variance
Efficiency Variance
Price Variance
Quantity Variance
