Question

At the beginning of February, the following was determined for a particular product:

Standard Quantity of material per unit	3 lbs.
Standard Price of material	$2.00 per lb.
Budgeted Units to be produced	5,000 units

The following data pertain to operations concerning the product for February:

Beginning Materials Inventory	1,200 lbs.
Ending Materials Inventory	900 lbs.
Actual Units Produced	5,100 units
Materials Purchase Price Variance	$1,520 Favorable
Materials Quantity Variance	$400 Unfavorable

What was the actual cost of materials purchased in February?

Answer 1

Ans.	*Calculations for actual quantity of materials used :
	Materials quantity variance = (Standard quantity - Actual quantity used) * Standard price
	-$400 = (15,300 - Actual quantity used) * $2
	-$400 / 2 = 15,300 - Actual quantity used
	-$200 = 15,300 - Actual quantity used
	Actual quantity used = 15,300 + 200
	Actual quantity used = 15,500
	*Calculations for actual quantity of materials purchased :
	Particulars	Amount
	Actual quantity of materials used	$15,500
	Add: Ending materials inventory	$900
	Less: Beginning materials inventory	-$1,200
	Actual quantity purchased	$15,200
	*Calculations for actual cost of materials purchased :
	Materials price variance = (Standard price * Actual quantity) - Actual materials purchased cost
	$1,520 = ($2 * 15,200) - Actual cost of materials purchased
	$1,520 = $30,400 - Actual cost of materials purchased
	Actual cost of materials purchased = $30,400 - $1,540
	$28,860