Rustco Ltd have developed a new paint to help prevent corrosion and are marketing it for use on the underside of vehicles. Rustco Ltd are an expanding company and have recently appointed a new production manager who is responsible for the production of the paint. The standard ingredients for one litre of the corrosion paint is: 600ml Corrosion resistant solution @ £24/litre £14.40 300ml Linseed oil @ £10/litre £ 3.00 100ml Red paint @ £8.00/litre £ 0.80 Standard cost per litre: £18.20 The corrosion resistant solution helps to protect the metal from corrosion, whilst the linseed oil helps to provide a waterproof coating. The red paint is purely to add colour. During December 2021, 1,280 litres of the new paint was produced which required 720 litres of corrosion resistant solution, costing £17,200; 450 litres of linseed oil costing £2,400 and 110 litres of red paint costing £2,100. Question 1 Required: You are to calculate the individual material mix variances and show the total material mix variance
Rustco Ltd have developed a new paint to help prevent corrosion and are marketing it for use on the underside of vehicles. Rustco Ltd are an expanding company and have recently appointed a new production manager who is responsible for the production of the paint.
The standard ingredients for one litre of the corrosion paint is:
600ml Corrosion resistant solution @ £24/litre £14.40
300ml Linseed oil @ £10/litre £ 3.00
100ml Red paint @ £8.00/litre £ 0.80
The corrosion resistant solution helps to protect the metal from corrosion, whilst the linseed oil helps to provide a waterproof coating. The red paint is purely to add colour.
During December 2021, 1,280 litres of the new paint was produced which required 720 litres of corrosion resistant solution, costing £17,200; 450 litres of linseed oil costing £2,400 and 110 litres of red paint costing £2,100.
Question 1
Required:
You are to calculate the individual material mix variances and show the total material mix variance
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