Tiller Co. makes organic fertilizer sold in one pound bags for the gardener market. The standard...

Tiller Co. makes organic fertilizer sold in one pound bags for the gardener market. The standard material is 25 ounces per bag of assorted meal at a cost of $0.78 per ounce. Tipper Co. budgeted to make 65,000 bags but due to high demand, they ended up making 76,000 bags. They paid $42,000 for 60,000 ounces of meal and used all in production during the period.

What is their material cost variance for this period? Enter a favorable variance is a positive number and an unfavorable variance as a negative number

Solutions

Expert Solution

Material Cost variance = $1,440,000 Favorable

Please check the answer and your data again if answer do not match because the standard date seems weird. Leave a comment below

Material Cost Variance
(	Standard Cost	-	Actual Cost	)
(	$ 1,482,000.00	-	$ 42,000.00	)
	1440000
	Variance		$ 1,440,000.00		Favourable-F

Standard DATA for		76000	Units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct Material	( 25 ounces x 76000 Units)=1900000 ounces	$ 0.78	$ 1,482,000.00

Actual DATA for		76000	Units
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct Material	60000	$ 0.70	$ 42,000.00

ekkarill92 answered 1 year ago

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