The Shum Company makes a product, Z, from two materials: X and Y. The standard prices and quantities are as follows:
$\begin{array}{lrr}
&\text { X } & \text {Y } \
\text { Price per pound} &\$6&\$9\
\text { Pounds per unit of product $ Z $ } &10&5\
\end{array}$

In May, 21,000 units of Z were produced by Shum Company, with the following actual prices and quantities of materials used:
$\begin{array}{lrr}
&\text { X } & \text { Y } \
\text { Price per pound } &\$5.70&\$8.40\
\text { Pounds used } &216,000&114,000\
\end{array}$

-
What is the total direct materials mix variance for May?
A) $12,000.
B) $24,000.
C) $36,000.
D) $60,000.

Question

The Shum Company makes a product, Z, from two materials: X and Y. The standard prices and quantities are as follows:
$\begin{array}{lrr}
  &\text { X } & \text {Y  } \
 \text {  Price per pound} &\$6&\$9\
 \text { Pounds per unit of product $ Z $ } &10&5\
\end{array}$

In May, 21,000 units of Z were produced by Shum Company, with the following actual prices and quantities of materials used:
$\begin{array}{lrr}
  &\text { X } &  \text { Y } \
  \text { Price per pound } &\$5.70&\$8.40\
 \text { Pounds used } &216,000&114,000\
\end{array}$

-
What is the total direct materials mix variance for May?
A) $12,000.
B) $24,000.
C) $36,000.
D) $60,000.

Quizplus · Accepted Answer

The total direct materials mix variance is the difference between the actual cost of the materials used and the standard cost of the materials that should have been used. The actual cost of the materials used is $5.70 per pound for X and $8.40 per pound for Y, while the standard cost of the materials that should have been used is $6 per pound for X and $9 per pound for Y. The total actual cost of the materials used is $216,000 + $114,000 = $330,000. The total standard cost of the materials that should have been used is 21,000 units * 10 pounds per unit * $6 per pound + 21,000 units * 5 pounds per unit * $9 per pound = $360,000. Therefore, the total direct materials mix variance is $360,000 - $330,000 = $30,000.

The Shum Company Makes a Product, Z, from Two Materials