Limpio, Inc., produces a key ingredient for liquid laundry detergents. Two chemical solutions, Chem A and Chem B, are mixed and heated to produce a cleansing chemical that is sold to companies that produce liquid detergents. The cleansing ingredient is produced in batches and has the following standards:

During March, the following actual production information was provided:
Direct Material Actual Mix
Chem A ..........140,000 gallons
Chem B .......... 60,000
Total ............200,000 gallons
Yield ...........158,400 gallons
Required:
1. Compute the direct materials mix and yield variances.
2. Compute the total direct materials usage variance for Chem A and Chem B. Show that the total direct materials usage variance is equal to the sum of the direct materials mix and yieldvariances.

Transcribed Image Text:

Direct Material Standard Mix Standard Unit Price Standard Cost Chem A Chem B 15,000 gallons 2.00 per gallorn $30,000 15,000 S45,000 5,000 20,000 gallons 15,000 gallons 3.00 Totals Yicld