Question

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Hart Company made 4,900 bookshelves using 22,000 board feet of wood costing $261,800. The company's direct materials standards for one bookshelf are 5 board feet of wood at $11.80 per board foot.

(1) Compute the direct materials price and quantity variances incurred in manufacturing these bookshelves.

AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price

Answer 1

Ans:

1) Direct Material Price Variance=Actual Quantity*(Standard price-Actual price)

                                                      =22,000($11.80-$11.9)

                                                      =$2,200 un favorable

Note:

Actual price = Actual Material cost/Actual Quantity

                      =$261,800/22,000

                      =$11.90

2) Direct Material Quantity Variance=Standard price*(Standard Quantity-Actual Quantity)

                                                              =$11.8*(24,500-22,000)

                                                              =$29,500 Favorable

Standard quantity=Actual production*standard quantity required per unit

                                 =4,900*5=24,500