Marys Marvelous Marmalade (MMM) makes a marmalade with oranges and raspberries. Customers keep returning to buy this marmalade because of the zesty taste of oranges and orange peel along with a hint of raspberries.

The production manager has determined that to produce 40 kg of marmalade requires 32 kg of oranges at a budgeted cost of $3.00 per kg and 18 kg of raspberries at a budgeted cost of $6.00 per kg.

First quarter results to make 8,200 kilograms of jam are as follows:

ACTUAL a

Cost Kilograms

used

Oranges $2.90 6,604

Raspberries $6.25 3,556

Required

1. What is MMMs total mix variance for the quarter?
2. What is MMMs total yield variance for the quarter?
3. Qualitative analysis: As the cost accountant for MMM, you must assess the first quarter results and make changes where necessary. Fully answer the following questions. Remember to use pertinent data to back your answer:

1. Explain why the production manager likely changed the mix of the oranges and raspberries.
2. Based on the variances calculated, did the production manager make the right decision when changing the mix? Why or why not?
3. Explain one other consequence of changing the mix that is not related to cost.

The production manager tells you he is satisfied with the first quarter results and would like to continue with the actual mixes in the next quarter. Do you agree with the manager? Why or why not?