Question:
ABC Ltd. produces an article by blending two basic raw materials. It operates a standard costing system and the following standards have been set for raw materials.
|
Material
|
Standard Mix
|
Standard Price
|
|
A
|
40%
|
Rs.4.00
|
|
B
|
60%
|
Rs.3.00
|
The standard loss in processing is 15%. During September 2007, the company produced 1, 700 kg of finished output.
The position of stock and purchases for the month of September 2007 is as under,
|
Material
|
Quantity as on
1/9/2007 Kg
|
Quantity as on
30/9/2007 -Kg
|
Purchases
Kg
|
Cost
Rs.
|
|
A
|
35
|
5
|
800
|
3, 400
|
|
B
|
40
|
50
|
1, 200
|
3, 000
|
Calculate Material Cost Variance, Price Variance, Quantity Variance, Mix Variance and Yield Variance. Assume that First In First Out method is followed for material issues