Direct Materials Usage Variances: Direct Materials Mix and YieldVariances
Energy Products Company produces a gasoline additive, Gas Gain.This product increases engine efficiency and improves gasolinemileage by creating a more complete burn in the combustionprocess.
Careful controls are required during the production process toensure that the proper mix of input chemicals is achieved and thatevaporation is controlled. If the controls are not effective, therecan be a loss of output and efficiency.
The standard cost of producing a 500-liter batch of Gas Gain is$135.00. The standard direct materials mix and related standardcost of each chemical used in a 500-liter batch are as follows:
| Chemical | Mix | SP | Standard Cost |
| Echol | 200 | liters | $0.200 | | $40.00 | |
| Protex | 100 | | 0.425 | | 42.50 | |
| Benz | 250 | | 0.150 | | 37.50 | |
| CT-40 | 50 | | 0.300 | | 15.00 | |
| Total | 600 | liters | | | $135.00 | |
The quantities of chemicals purchased and used during thecurrent production period are shown in the following schedule. Atotal of 160 batches of Gas Gain were manufactured during thecurrent production period. Energy Products determines its cost andchemical usage variations at the end of each production period.
| Chemical | Quantity Used |
| Echol | 30,400 | liters |
| Protex | 14,720 | |
| Benz | 43,200 | |
| CT-40 | 8,160 | |
| Total | 96,480 | liters |
Required:
Compute the total direct materials usage variance, and thenbreak down this variance into its mix and yield components. Do notround intermediate computations and round final answers to thenearest cent. (CMA adapted)
| Usage variance | $fill in the blank | Favorable |
| Mix variance | $fill in the blank | Favorable |
| Yield variance | $fill in the blank | Unfavorable |
