Calculate the direct material quantity variances

Assignment Help Cost Accounting

Reference no: EM133628506

Question: Mammoth Breweries is a local microbrewery that makes a single kind of beer. One of the main raw materials needed in the brewing process is Hops. During the year, Mammoth changed the mix of Low quality and High quality Hops in their brewing process.

Budgeted cost for a standard barrel is as follows:

	Amount (in kg)	Price per kg
Low Quality	15kg	$4.00
High Quality	10kg	$5.00

	Amount Purchased	Price paid	Amount used
Low Quality	240,000 kg	$3.75/kg	221,211 kg
High Quality	145,000kg	$4.99/kg	111,222 kg

Actual production was 14,000 barrels - this was 2,000 barrels less than planned.

Required

Calculate the following:

A. Direct Material Quantity (Efficiency)Variances

B. Direct Material Mix Variances

C. Direct Material Yield Variances

D. Identify and briefly discuss at least two qualitative factors that should be considered.

E. Was it a good decision to change the mix?

Reference no: EM133628506

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