Question

Question 10 Simba Company’s standard materials cost per unit of output is $9.60 (2.00 pounds x $4.80). During July, the company purchases and uses 2,160 pounds of materials costing $11,448 in making 1,200 units of finished product. Compute the total, price, and quantity materials variances. (Round per unit values to 2 decimal places, e.g. 52.75 and final answers to 0 decimal places, e.g. 52.) Total materials variance $ Materials price variance $ Materials quantity variance $

Answer 1

Calculation of material variances

Standard price of material = $4.80 per pound

Standard quantity to produce 1 unit = 2 pounds

Actual output = 1,200 units

Standard quantity to produce 1200 units = 1200 x 2

= 2400 pounds

Actual material cost = $11,448

Actual quantity of material used = 2,160 pounds

Actual price of material = Actual material cost/Actual quantity of material used

= 11,448/2,160

= $5.30 per pound

Direct material price variance = Actual quantity x (Standard price - Actual price)

= 2,160 x (4.80 - 5.30)

= $1,080 (Unfavorable)

Direct material quantity variance = Standard price x (Standard quantity - Actual quantity)

= 4.80 x (2,400 - 2,160)

= $1,152 favorable

Total material variance = Standard price x Standard quantity - Actual price x Actual quantity

= 4.80 x 2,400 - 5.30 x 2,160

= 11,520 - 11,448

= $72 Favorable

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