) Saskatoon Company Uses Two Raw Materials, a and B

question 108

Multiple Choice

) Saskatoon Company uses two raw materials, A and B, in the manufacture of its only product: Zizbo. The materials are very close substitutes. The standard proportions for the manufacture of a unit of Zizbo are 2 units of A and 3 units of B. The unit standard prices of A and B are $10 and $8, respectively. During the month of August, the company used 450 units of A and 750 units of B to produce 230 units of Zizbo.
- For raw material A,what were the mix and yield variances,respectively?

• A) $60 favourable and $440 unfavourable.
• B) $200 unfavourable and $300 favourable.
• C) $300 favourable and $200 unfavourable.
• D) $300 unfavourable and $200 favourable.

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Definitions:

Variable Costs

Expenses that vary in direct proportion to changes in the level of an organization's activity or volume of output.

Fixed Costs

Expenses that do not change with the level of production or sales volume, such as rent, salaries, and insurance premiums.

Peak-period

A time of maximum activity or demand, often leading to higher prices and increased revenue for companies able to meet the demand.

Logistics Department

The division of a company responsible for the management of the movement and storage of materials, goods, and information.