Direct materials efficiency variance, mix and yield variances;

working backward. (30-40 minutes) Calypso, SA, manufactures and sells fertilisers. Calypso uses the following standard direct materials costs to produce 1 tonne of fertiliser: jui4

Note that 1.2 tonnes of input quantities are required to produce 1 tonne of fertiliser. No stocks of direct materials are kept. Purchases are made as needed, so all price variances are related to direct materials used. Calypso produced 2,000 tonnes of fertiliser in a particular period. The total direct materials yield variance for the period was Esc 35,000,000 U. The actual input mix for the period was 50% of Alpha and 50% of Gamma.
REQUIRED 1. Calculate the individual direct materials yield variances for the period.

Calculate the individual and total direct materials mix variances for the period.
Calculate the individual and total direct materials efficiency variances for the period.
Briefly describe the conclusions you would draw from the variance analyses.

Transcribed Image Text:

75% of the input materials is Alpha at Esc 400,000 per tonne 25% of the input materials is Gamma at Esc 200,000 per tonne Total standard cost of 1.2 tonnes of inputs Esc 360,000 60,000 Esc 420,000