Question

The standard cost of Product B manufactured by Pharrell Company includes 3.0 units of direct materials at $6.8 per unit. During June, 27,500 units of direct materials are purchased at a cost of $6.60 per unit, and 27,500 units of direct materials are used to produce 9,100 units of Product B.

(a)

Compute the total materials variance and the price and quantity variances.

Total materials variance		$enter a dollar amount		select a type of the variance                                                          Neither favorable nor unfavorableUnfavorableFavorable
Materials price variance		$enter a dollar amount		select a type of the variance                                                          FavorableNeither favorable nor unfavorableUnfavorable
Materials quantity variance		$enter a dollar amount		select a type of the variance                                                          UnfavorableNeither favorable nor unfavorableFavorable

(b)

Compute the total materials variance and the price and quantity variances, assuming the purchase price is $6.90 and the quantity purchased and used is 26,500 units.

Total materials variance		$enter a dollar amount		select a type of the variance                                                          UnfavorableFavorableNeither favorable nor unfavorable
Materials price variance		$enter a dollar amount		select a type of the variance                                                          Neither favorable nor unfavorableFavorableUnfavorable
Materials quantity variance		$enter a dollar amount		select a type of the variance                                                          FavorableNeither favorable nor unfavorableUnfavorable

Please circle or point out the final answers!!

Answer 1

Answer-a)- Total Materials variance = $4140 F.

Materials price variance= $5500 F.

Materials Quantity variance = $1360 U.

Explanation- Total Materials variance = Standard cost-Actual costs

= (27300 units*$6.8 per unit)- (27500 units*$6.6 per unit)

= $185640-$181500

= $4140 Favorable.

Materials price variance = (Standard price – Actual price) * Actual quantity used

= ($6.80 per unit – $6.60 per unit)*27500 units

= $5500 Favorable

Material Quantity variance = (Standard Quantity- Actual Quantity)*Standard price

=(27300 units - 27500 units)*$6.8 per unit

= $1360 Unfavorable

Where:-Standard Quantity = No. of units of direct material*Actual output

= 3.0 unit *9100 units

= 27300 units

Answer-b)- Total Materials variance = $2790 F.

Materials price variance= $2650 U.

Materials Quantity variance = $5440 F.

Explanation- Total Materials variance = Standard cost-Actual costs

= (27300 units*$6.8 per unit)- (26500 units*$6.9 per unit)

= $185640-$182850

= $2790 Favorable.

Materials price variance = (Standard price – Actual price) * Actual quantity purchased

= ($6.80 per unit – $6.90 per unit)*26500 units

= $2650 Unfavorable

Material Quantity variance = (Standard Quantity- Actual Quantity)*Standard price

=(27300 units - 26500 units)*$6.8 per unit

= $5440 Favorable

Where:-Standard Quantity = No. of units of direct material*Actual output

= 3.0 unit *9100 units

= 27300 units