7-40 Direct materials efficiency, mix, and yield variances. Sandys Snacks produces snack mixes for the gourmet and natural foods market. Its most popular product is Tempting Trail Mix, a mixture of peanuts, dried cranberries, and chocolate pieces. For each batch, the budgeted quantities and budgeted prices are as follows:

Peanuts Dried cranberries Chocolate pieces

Quantity per Batch

60 cups 30 cups 10 cups

Price per Cup

$1 $2 $3

Small changes to the standard mix of direct materials reflected in the above quantities do not significantly affect the overall end product. In addition, not all ingredients added to production end up in the finished product, as some are rejected during inspection.

In the current period, Sandys Snacks made 100 batches of Tempting Trail Mix with the following actual quantity, cost, and mix of inputs:

Peanuts Dried cranberries Chocolate pieces Total actual

Actual Quantity

6,720 cups 2,625 cups 1,155 cups

10,500 cups

Actual Cost

$ 5,712 5,775 3,350

$14,837

Actual Mix

64% 25% 11%

100%

1. What is the budgeted cost of direct materials for the 100 batches? 2. Calculate the total direct materials efficiency variance. 3. Calculate the total direct materials mix and yield variances. 4. How do the variances calculated in requirement 3 relate to those calculated in requirement 2? What do

the variances calculated in requirement 3 tell you about the 100 batches produced this period? Are the variances large enough to investigate?