Question

Ruby Company produces a chair for which the standard specifies 3 yards of material per unit. The standard price of one yard of material is $10.40. During the month, 5,900 chairs were manufactured, using 17,300 yards at a cost of $9.78 per yard.

Determine the following: Enter favorable variances as negative numbers.

a. Direct materials price variance	$
b. Direct materials quantity variance	$
c. Total direct materials cost variance	$

Answer 1

				Actual output =		5900	Units
Actual Cost		Standard Cost per unit		Standard Cost for Actual Output
Actual Quantity	AP	Actual Cost		Standard Qunatity	SP	Standard Cost		Standard Qunatity	SP	Standard Cost
17300	$               9.78	$               1,69,194		3	$ 10.40	$                     31.20		17700	$ 10.40	$               1,84,080
Yards				Yards				(5,900 X 3 Yards)
SOLUTION : A
Direct Material price Variance = (	Standard Price	-	Actual Price	) "X"	Actual Quantity
Direct Material price Variance = (	$                     10.40	-	$                        9.78	) "X"	17300
Direct Material price Variance =	$                        0.62	"X"	17300
Direct Material price Variance =	$                   10,726	Favourable
SOLUTION : B
Material Quantity Variance = (	Standard Quantity	-	Actual Quantity	) "X"	Standard Cost per unit
Material Quantity Variance = (	17,700	-	17,300	) "X"	$                     10.40
Material Quantity Variance =	400	"X"	$                      10.40
Material Quantity Variance =	$                     4,160	Favourable
SOLUTION : C
Material Cost Variance =	Standard Cost	"-"	Actual Cost
Material Cost Variance =	1,84,080	"-"	1,69,194
Material Cost Variance =	14,886	Favourable