A company is producing an electromagnetic field parts for this it requires mater

Question

A company is producing an electromagnetic field parts for this it requires material Alpha whose original standard consumption is 800 units at 24 $ as well as its actual consumption is 640 units at 26 $. Similarly for material Neutro whose original standard consumption is 400 units at $ 20 as well as its actual consumption of 520 units at 20 $. It is decided to revise the standard consumption of material Alpha to 680 and that of material Neutro to 40 units to improve the quality of the product. Find its original standard mix ratio, revised standard mix ratio.

Explanation / Answer

Original standard mix ratio:

Material Mix Variance = [(Actual Quantity for original standard mix ratio - AQ) x SP]

Material Alpha = (800 -640) x 24 = $3840

Material Neutro = (400 - 560) x 20 = $3200

Grand total = (3840 - 3200) = $640

Revised Standard mix ratio:

Material mix Variance = [(RSQ - AQ) x SP]

Material Alpha = (680 - 640) x 24 = $960

Material Neutro = (520 - 560) x 10 = $400

Grand total = (960-400) = $560

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