Stacy, Inc., produces a product using a process that allows for substitution bet

Question

Stacy, Inc., produces a product using a process that allows for substitution between two materials, Alpha and Beta. The company has the following direct materials data for its product:

The company had the following results in June:

Required:

a. Compute materials price and efficiency variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

b. Compute materials mix and yield variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

Standard costs for one unit of output Alpha 30 units of input at $ 5.00 Beta 60 units of input at $ 13.50

Explanation / Answer

Alpha variance:

Beta variances:

Mix and yield variances:

Standard quantity Standard rate Standard cost Actual quantity Actual rate Actual cost SQ SP SC AQ AP AC 105,000 5.00 525,000.00 113,000 4.50 508,500.00 Total material cost/spending variance AQ*AP - SQ*SP 525000-508500 16,500.00 16500 F Material price variance AQ*(SP-AP) 113000*(5-4.5) 56,500.00 56500 F Material quantity variance SP*(SQ-AQ) 5*(105000-113000) -40,000.00 40000 U

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