Materials Mix and Yield Variances: LAR Chemical Company manufactures a wide variety of chemical compounds and liquids for industrial uses. The standard mix for producing a single batch of 500 gallons of one liquid is as follows:

There is a 20 percent loss in liquid volume during processing due to evaporation. The finished liquid is put into 10-gallon bottles for sale. Thus, the standard material cost for a 10-gallon bottle is $13. The actual quantities of direct materials and the cost of the materials placed in production during November were as follows (materials are purchased and used at the same time):

A total of 4,000 bottles (40,000 gallons) were produced during November.

Required: Calculate the total direct material variance for the liquid product for the month of November and then further analyze the total variance into:

a. Materials price and efficiency variances.

b. Materials mix and yield variances.

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Liquid Quantity Cost Total Chemical (in gallons) (per gallon) Cost Maxan 100 $2.00 $200 Salex 300 .75 225 Cralyn 225 1.00 225 625 $650