A chemical is made by blending two inputs. The standard mix for a 100 kg input batch is 60 kg of Input A at $2.00 per kg and 40 kg of Input B at $5.00 per kg. In June the company used 6,000 kg of A and 4,500 kg of B. What is the direct materials mix variance?

Correct answer: A) $900 unfavorable

Explanation

Total input = 10,500 kg. At the standard mix it would have been 6,300 kg of A and 4,200 kg of B. Mix variance = (actual - standard mix quantity) x standard price: A (6,000 - 6,300) x $2 = $600 F; B (4,500 - 4,200) x $5 = $1,500 U. Net mix variance = $900 unfavorable, because more of the expensive input was used.