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Hung-2 Ltd. produces vegan source, Product V, by mixing and heating three ingred...
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Hung-2 Ltd. produces vegan source, Product V, by mixing and heating three ingredients: A, B and C. The company uses a standard costing system to monitor its costs. The standard material cost for 100 Kg of Product V is as follows:
Material | Kg | Cost per Kg | Cost per 100 Kg of Product V |
A | 40 | 2.00 | 80.00 |
B | 60 | 5.00 | 300.00 |
C | 20 | 1.00 | 20.00 |
| 120 |
| 400.00 |
In October, 4,600 Kg of Product V was produced using the following material inputs:
Material | Kg | Cost per Kg | Total Cost ($) |
A | 2,200 | 1.80 | 3,960 |
B | 2,500 | 6.00 | 15,000 |
C | 920 | 1.00 | 920 |
| 5,620 |
| 19,880 |
Required:
Calculate the Material Usage, Mix and Yield Variances and interpret the results and suggest the possible causes.