Question

The standard cost of product 777 includes 2.70 units of direct materials at $5.80 per unit. During August, the company bought 28,500 units of materials at $5.90 and used those materials to produce 10,800 units.

Compute the total, price, and quantity variances for materials.

Total materials variance		$		Neither favorable nor unfavorableFavorableUnfavorable
Materials price variance		$		UnfavorableFavorableNeither favorable nor unfavorable
Materials quantity variance		$		UnfavorableFavorableNeither favorable nor unfavorable

Answer 1

Answer:

Total Material Variance         = ( Standard quantity x Standard Price) (-) (Actual quantity x Actual Price)         = ( 10,800 units x 2.70 units x $ 5.80 ) (-) ( 28,500 Units x $ 5.90)         =    $ 169,128 (-) $ 168,150         =    $ 978 (Favourable )

Total Material Variance       =    $ 978 (Favourable )

Materials Price Variance             = Actual quantity x ( Standard Price (-) Actual Price)             =    28,500 Units x ( $ 5.80 (-) $ 5.90 )             =      $ 2,850 (UnFavourable )

Materials Price Variance    =      $ 2,850 (UnFavourable )

Materials Quantity Variance            = ( Standard quantity x Standard Price) (-) (Actual quantity x Standard Price)            = ( 10,800 units x 2.70 units x $ 5.80 ) (-) ( 28,500 x $ 5.80 )            =    $ 169,128 (-) $ 165,300            =    $ 3,828 (Favourable )

Materials Quantity Variance =    $ 3,828 (Favourable )