Question

In: Accounting

Ruby Company produces a chair for which the standard specifies 3 yards of material per unit....

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 $

Solutions

Expert Solution

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

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