Question 1

Section A

HeavyMetal Co mixes two materials, X and Y, to produce an industrial solvent. The standard mix is 60% X and 40% Y. Standard prices are $10/kg for X and $15/kg for Y. In a period, 1,000 kg of materials were input: 500 kg of X and 500 kg of Y. What is the material mix variance?

Accepted Answer

Compare the Actual Quantity in Standard Mix (AQSM) to the Actual Quantity in Actual Mix (AQAM). Multiply the difference for each material by its standard price and sum them.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Getting the sign wrong (Favorable instead of Adverse) by not noticing Y is more expensive.

Section A

HeavyMetal Co mixes two materials, X and Y, to produce an industrial solvent. The standard mix is 60% X and 40% Y. Standard prices are $10/kg for X and $15/kg for Y. In a period, 1,000 kg of materials were input: 500 kg of X and 500 kg of Y. What is the material mix variance?

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 3

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