Rainbow Bubbles' managers expected to produce 30,000 units of product in March. Two materials are used to produce the bubble product: Material A is the soap that makes the bubbles and determines the size of the bubbles; Material B is the colour agent that determines the brightness of the colours. The standard cost for the materials used for 30,000 units is $156,240 for material A and $104,160 for material B and the standard cost per unit is $4.20 per litre for material A and $2.10 per litre for material B. Actual production in March was 28,650 units. The company purchased and used 33,750 litres of material A costing $143,436.22 and 49,736.4 litres of material B costing $99,472.80.

REQUIRED

A.

What was the standard quantity of litres for material A and material B per unit?

B.

What were the direct materials price variances for materials A and B for March?

C.

What were the direct materials efficiency variances for materials A and B for March?

D.

Calculate the materials mix and yield variances for materials A and B for March.

E.

Identify possible causes for the variances.

F.

Rainbow Bubbles is known for producing very large, colourful bubbles. Discuss possible business concerns arising from of these variances.