A Chemical Company Produces a Product Used by Manufacturers of Plastics

Essay

A chemical company produces a product used by manufacturers of plastics. Two basic chemicals go into this product. The standards for one-liter of this product are:
Chemical 1: 800 ml. @ $50 per liter
Chemical 2: 200 ml. @ $200 per liter
During the last period, 5,000 liters of the solvent were produced and the company purchased the following amounts of each chemical:
Chemical 1: 5,400 liters @ $59.00 per liter
Chemical 2: 900 liters @ $225.00 per liter
Because these chemicals are volatile, the company uses them immediately upon purchase, so there are no beginning and ending inventories.
Required:
(Be sure to indicate whether the variance is favorable or unfavorable.)
a. Compute the direct material price variances for the two basic chemicals.
b. Compute the direct material efficiency variances for the two basic chemicals.
c. Compute the direct material mix variances for the two basic chemicals.
d. Compute the direct material yield variances for the two basic chemicals.