SMOOTHIE PLC: MIX AND YIELD CALCULATION EXAMPLE

Smoothie plc, a fruit juice manufacturer, has determined the following standard cost details for the three ingredients that are blended together to make their tropical fruit drink:

Standard cost data per litre of tropical fruit drink:		£
0.5 litres of apple juice @ £0.55 per litre		0.275
0.30 litres of pineapple juice @ £1.20 per litre		0.36
0.25 litres of mango juice @ £0.80 per litre		0.20
		0.835
Actual data for December 200X was as follows:
Output of tropical fruit drink (000s litres) 1,650
Raw materials used:	Apple		Pineapple		Mango
Quantity (000s litres)	1,072		412		396
Cost (£000s)	510		520		310

Given the perishable nature of the raw materials, Smoothie plc does not hold any stock of ingredients.

Requirements:

(a) Calculate the individual material mix variances and the total material yield variance for December 200X.

(b) Comment on the usefulness to management of individual material mix variances and the yield variance.