| Course | AC420 Cost Accounting |
|---|---|
| Unit | Unit 7 |
| Paper type | Standard cost variance analysis |
| Length | About 550 words, 4 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Accounting |
| Updated | October 2026 |
Free sample paper for AC420 Unit 7
Price, Mix and Yield in an Iron Charge: A Unit 7 Standard Cost Variance Analysis of One Month's Melt
[Student Name]
Purdue University Global
AC420: Cost Accounting
Unit 7 Standard Cost Variance Analysis
[Instructor Name]
[Date]
Bellhaven Iron Works and every figure are composite; the textbooks and article cited are real.
Standard Cost Card, Iron Charge
1. Steel scrap: 55 percent at $0.21 a pound.
2. Pig iron: 25 percent at $0.38.
3. Foundry returns: 20 percent at $0.12.
Blended standard price: $0.2345 a pound. Standard yield: 72 pounds of good castings per 100 pounds poured. Labor: 0.009 hours per pound of good castings at $26.00 an hour.
Flexing the Budget
April planned 230,000 pounds of good castings and produced 216,000. The static materials budget, $74,909.72, would credit the melt shop with $4,559.72 of savings it never earned, simply because less was made. Flexed to actual output, allowed input is 216,000 / 0.72 = 300,000 pounds, and the flexible budget for materials is $70,350.00.
Actual Results
Steel scrap 150,000 pounds at $0.226; pig iron 97,960 pounds at $0.371; returns 62,040 pounds at $0.12. Total poured: 310,000 pounds, a yield of 69.68 percent. Actual materials cost: $77,687.96. Labor: 2,076 hours costing $55,579.
Materials Price Variances (actual pounds)
1. Scrap: ($0.226 minus $0.21) x 150,000 = $2,400.00 unfavorable.
2. Pig iron: ($0.371 minus $0.38) x 97,960 = $881.64 favorable.
3. Returns: transferred at standard, no variance.
Total price variance: $1,518.36 unfavorable.
Materials Quantity Variance, Split at Standard Prices
1. Mix: actual pounds at standard prices, $76,169.60, less actual pounds at the standard mix, 310,000 x $0.2345 = $72,695.00: $3,474.60 unfavorable. Pig iron rose to 31.6 percent of the charge and scrap fell to 48.4 percent.
2. Yield: (310,000 minus 300,000) x $0.2345 = $2,345.00 unfavorable.
Total quantity variance: $5,819.60, which with price reconciles to the $7,337.96 total.
The mix and yield pieces add back to the undivided quantity variance, which shows that splitting it loses nothing and tells the plant two different stories: what went into the furnace, and how much good iron came out.
Labor Variances
Standard hours allowed: 216,000 x 0.009 = 1,944.
1. Rate: $55,579 minus 2,076 x $26.00 = $1,603 unfavorable.
2. Efficiency: (2,076 minus 1,944) x $26.00 = $3,432 unfavorable.
One Cause for Each Variance
1. Scrap price, unfavorable: the regional scrap market rose 7.6 percent in March and April, confirmed by the purchasing file.
2. Pig iron price, favorable: a fixed annual contract, unrelated to scrap quality or usage.
3. Mix, unfavorable: clean scrap was short, so the melt supervisor raised pig iron to hold chemistry.
4. Yield, unfavorable: a sand system fault in the second week raised casting rejects.
5. Labor rate, unfavorable: overtime to repour rejected castings.
6. Labor efficiency, unfavorable: the repours themselves, 132 extra hours.
The causes chain together. The yield problem drove both labor variances, and a favorable price variance on pig iron was not a purchasing achievement. Variances signal where to look rather than who to blame (Datar & Rajan, 2021), and standards are only useful if updated when processes change (Garrison et al., 2021). Kaplan and Cooper (1998) caution that monthly variance reports can arrive too late to help operators; the sand fault was visible on the floor within a day.
References
Datar, S. M., & Rajan, M. V. (2021). Horngren's cost accounting: A managerial emphasis (17th ed.). Pearson.
Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2021). Managerial accounting (17th ed.). McGraw Hill.
Kaplan, R. S., & Cooper, R. (1998). Cost & effect: Using integrated cost systems to drive profitability and performance. Harvard Business School Press.
Reading the AC 420 Unit 7 instructions
Unit 7 of AC420 asks you to compute standard cost variances and explain each with a cause. Start with the standard cost card, including mix percentages and yield where materials are blended. Flex the budget to actual output before computing any variance, and show what the static budget would have implied. Compute materials price variances on actual quantities, input by input. Where inputs can substitute for one another, split the quantity variance into mix and yield at standard prices, and reconcile the pieces to the total. Compute labor rate and efficiency variances on standard hours allowed for actual output. Then give one specific cause for each variance, drawn from the facts of the case, and note where causes connect. Avoid treating a favorable variance as automatically good. Cite the textbook and a source on cost systems in APA 7.
How this AC420 Unit 7 example is built
The sample's cost card blends 55 percent scrap, 25 percent pig iron and 20 percent returns at $0.2345 a pound with a 72 percent yield. A flexing section shows the static budget would have credited the melt shop with $4,559.72 it never earned. Actual pounds, prices and labor follow. Price variances are $2,400 unfavorable on scrap and $881.64 favorable on pig iron. The quantity variance splits into a $3,474.60 mix variance, as pig iron rose to 31.6 percent of the charge, and a $2,345 yield variance. The highlighted sentence explains that the pieces reconcile and tell two stories. Labor shows $1,603 rate and $3,432 efficiency variances. A six-line cause table ends with a paragraph on how the sand fault drove both labor variances, citing Datar and Rajan, Garrison and colleagues, and Kaplan and Cooper.
Reading the AC420 Unit 7 grading rubric
AC420 variance analyses earn marks for correct computation, correct flexing and causes that fit the facts. Every variance must be computed against a budget flexed to actual output, and graders penalize analyses built on the static budget. Price variances belong on actual quantities. Mix and yield must be computed at standard prices and reconcile to the undivided quantity variance. Labor efficiency must use standard hours allowed for actual output. Each cause should be specific and supported by information in the case, not a generic reason such as poor management. Recognizing that variances interact, such as a yield problem driving labor efficiency, shows deeper understanding. Labeling favorable and unfavorable correctly is basic but frequently missed. Layout and APA 7 citation carry the final few points.
AC420 Unit 7 help: mistakes that cost points
Unit 7 analyses often compute variances against the static budget, mixing a volume effect into every figure. Price variances are multiplied by standard quantities, which breaks the reconciliation. The mix and yield split is skipped even when the standard gives a mix, or the pieces fail to add back to the total. Labor efficiency uses budgeted rather than actual output. Causes are generic, or a favorable price variance is credited to purchasing when a contract explains it. Variances are listed in isolation with no link between them. If your section's standard covers labor grades, ingredients or a service process, our writers can compute the variances and build the cause table from your data.
Get an AC420 Unit 7 example written to your instructions
Standard cost cards, actual quantities and prices by input, and output for the period are what the Unit 7 problem needs from you, along with the rubric and whether mix and yield are required. Every variance is returned signed F or U, with a plausible cause beside it. Allow 24-48h; the first custom sample costs nothing. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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AC420 Unit 7 questions, answered
When does a problem call for mix and yield variances?
When inputs can substitute for one another in a standard recipe, as scrap, pig iron and returns can in a charge, or as grades of labor can on a crew. If the inputs are not substitutable, a single quantity variance per input is enough. AC420 problems that give a standard mix percentage almost always expect the split.
Can a favorable price variance be bad news?
Yes, and the cause table tests for it. Cheaper material that raises defects shows up later as unfavorable yield and efficiency, so a purchasing gain can cost the plant more than it saves. Here the pig iron price was favorable for an unrelated reason, a fixed contract, and the sample says so rather than implying a link that the facts do not support.
Why is the price variance computed on actual pounds?
Because the price effect belongs to every pound actually bought and used, not to the pounds the standard allowed. Multiplying by standard quantity would push part of the price effect into the mix and yield figures and break the reconciliation. When purchases differ from usage, the sample takes price at purchase and notes why the pieces no longer sum.
Where can I find a free AC420 Unit 7 sample paper?
This page holds a complete AC420 Unit 7 standard cost variance analysis for a composite foundry's iron charge, with flexing, price, mix, yield and labor variances, a cause table and APA 7 references.
What caused the yield variance in AC420 Unit 7?
A sand system fault in the second week raised casting rejects, so the plant poured 310,000 pounds for 216,000 pounds of good castings, a yield of 69.68 percent against the 72 percent standard.