Question

What is the total raw materials budget variance. Choose 2 answers Units =60,000 Standard Cost Usage Steel $10.00/lb 7.2 oz/unit Plastic $4.00/lb 2.6 oz/unit Actual Cost Usage Steel $10.70/lb 6.9 oz/unit Plastic $3.70/lb 3.1 oz/unit (10 total points) Must get both answers correct to get 4 points

Answer 1

Direct Materials Variance = Total Actual Direct Material Cost - Total Standard Direct Material Cost

Total Actual Direct Material Cost = Actual Quantity Used X Actual Cost per Unit

Total Standard Direct Material Cost = Standard Quantity X Standard Cost per Unit

Usage Steel

Standard Cost per lb	$ 10
Standard Cost per unit (0.45 lb/unit)	$ 4.5
Standard Quantity (60,000 units * 0.45 lb)	27,000 lb

Actual Cost per lb	$ 10.70
Actual Cost per unit (0.43125 lb/unit)	$ 4.614375
Actual Quantity (60,000 units * 0.43125 lb)	25,875 lb

Direct Materials Variance = $ 119,396.953125 - $ 121,500 = $ (-) 2103.046875

Total Actual Direct Material Cost = 25,875 lb X $ 4.614375 = $ 119,396.953125

Total Standard Direct Material Cost = 27,000 lb X $ 4.5 = $ 121,500

Plastic

Standard Cost per lb	$ 4
Standard Cost per unit (0.1625 lb/unit)	$ 0.65
Standard Quantity (60,000 units * 0.1625 lb)	9,750 lb

Actual Cost per lb	$ 3.70
Actual Cost per unit (0.19375 lb/unit)	$ 0.716875
Actual Quantity (60,000 units * 0.19375 lb)	11,625 lb

Direct Materials Variance = $ 8,333.671875 - $ 6337.5 = $ 1996.171875

Total Actual Direct Material Cost = 11,625 lb X $ 0.716875 = $ 8,333.671875

Total Standard Direct Material Cost = 9,750 lb X $ 0.65 = $ 6337.5

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