A company uses batch production methods to produce a single product by combining two materials Tee and Pee. The company has budgeted for a material mix ratio of 60:40 for Tee and Pee respectively. The following information relates to each batch: Direct material input 200kg Material Tee standard price £2 per kg Material Pee standard price £3 per kg Standard yield 160kg of product. The waste generated has no value. Actual results for Month 10 were as follows: Output 16,500 kg Material Tee 13,020 kg £24,738 Material Pee 7,980 kg £25,536 REQUIRED (a) Calculate the following variances: (i) Material price for each material and in total (ii) Material mix for each material and in total (iii) Material yield in total. (b) Explain the meaning of: (i) Material mix variance (ii) Material yield variance (c) Calculate the material usage variance and reconcile this with the appropriate variances calculated in (a) above.
