Question

Direct Materials Variances

Bellingham Company produces a product that requires 5 standard pounds per unit. The standard price is $6.5 per pound. If 5,900 units required 30,700 pounds, which were purchased at $6.17 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) total direct materials cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a. Direct materials price variance	$	Favorable
b. Direct materials quantity variance	$	Unfavorable
c. Total direct materials cost variance	$	Favorable

Answer 1

Solution

Direct Material Price Variance	$         10,131.00	Favourable-F
Direct Material quantity variance	$           7,800.00	Unfavourable-U
Direct Total Material Variance	$           2,331.00	Favourable-F

Working

Standard DATA for		5900	Units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct Material	( 5 pounds x 5900 Units)=29500 pounds	$                  6.50	$         1,1,750.00

		5900	Units
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct Material	30700	$            6.17	$ 189,419

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                    6.50	-	$                     6.17	)	x	30700
	10131
	Variance		$           10,131.00			Favourable-F
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	29500	-	30700	)	x	$              6.50
	-7800
	Variance		$             7,800.00			Unfavourable-U
Material Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$      1,91,750.00	-	$       1,89,419.00	)
	2331
	Variance		$             2,331.00			Favourable-F