Question

Sampson Inc. has the following direct material standard to produce one Jumper:

2.5 pounds per Jumper at $6.00 per pound

Last week 2,800 pounds of material were purchased and used to make 2,000 Jumpers. The material cost a total of $10,000.

1. What is the ACTUAL PRICE (AP) per pound paid for the material?

2. Sampson’s direct material variance (MPV) for the week was?

3. The standard quantity of material that should have been used to produce 2,000 Jumper’s is??

4. Sampson’s direct material quantity variance (MQV) for the week was ?

Answer 1

Answer 1.

Actual price per pound = Actual material cost / Actual quantity used
Actual price per pound = $10,000 / 2,800
Actual price per pound = $3.57

Answer 2.

Standard quantity allowed = Units produced * Standard quantity per unit
Standard quantity allowed = 2,000 * 2.50
Standard quantity allowed = 5,000 pounds

Standard material cost = Standard quantity allowed * Standard price per pound
Standard material cost = 5,000 * $6.00
Standard material cost = $30,000

Direct material variance = Actual material cost - Standard material cost
Direct material variance = $10,000 - $30,000
Direct material variance = $20,000 Favorable

Answer 3.

Standard quantity allowed = Units produced * Standard quantity per unit
Standard quantity allowed = 2,000 * 2.50
Standard quantity allowed = 5,000 pounds

Answer 4.

Direct material quantity variance = Standard price per pound * (Actual quantity used - Standard quantity allowed)
Direct material quantity variance = $6.00 * (2,800 - 5,000)
Direct material quantity variance = $13,200 Favorable