In: Accounting
Direct Materials Variances
The following data relate to the direct materials cost for the production of 1,900 automobile tires:
Actual: | 57,600 lbs. at $1.7 per lb. | |
Standard: | 56,400 lbs. at $1.65 per lb. |
a. Determine the direct materials price variance, direct materials quantity variance, and 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.
Direct Materials Price Variance | $ | |
Direct Materials Quantity Variance | $ | |
Total Direct Materials Cost Variance | $ |
Answer: |
Direct Materials Price Variance = Actual Quantity x ( Standard price (-) Actual price ) = 57,600 x ( $ 1.65 (-) $ 1.70 ) = $ 2,880 ( Unfavourable ) |
Direct Materials Price Variance = $ 2,880 ( Unfavourable ) |
Direct Materials Quantity
Variance = Standard Price x ( Standard Quantity (-) Actual Quantity) = $ 1.65 x ( 56,400 (-) 57,600 ) = $ 1,980 ( Unfavourable ) |
Direct Materials Quantity Variance = $ 1,980 ( Unfavourable ) |
Total Direct Materials Cost
Variance = (Standard Quantity x Standard Price ) (-) (Actual Quantity x Actual price ) = ( 56,400 x $ 11.65 ) (-) ( 57,600 x $ 1.70) = $ 93,060 (-) $ 97,920 = $ 4,860 ( Unfavourable ) |
Total Direct Materials Cost Variance = $ 4,860 ( Unfavourable ) |