. Question A chemical company has the following standards for producing 9 gallons of a machine lubricant. 5 gallons of material P @ 0.70 per gallon 5 gallons of material Q @ 0.92 per gallon No stocks of raw materials are kept. Purchases are made as needed so that all price variances relate to materials used. Actual results showed that 100,000 gallons of material were used during a particular period as follows. 45,000 gallons of P at an actual cost per gallon used of $0.80 = $36,000 55,000 gallons of Q at an actual cost per gallon used of 0.97 = $53,350 100,000 $89,350 Question (cont'd) During the period 92,070 gallons of the machine lubricant were produced. Required: - Calculate the total materials variance and analyse it into its price, mix and yield components. (10 marks) - Explain the circumstances under which a materials mix variance is relevant to managerial control. (10 marks) (Total: 20 marks)