Question

Ed Co. manufactures two types of O rings, large and small. Both rings use the same material but require different amounts. Standard materials for both are shown. Large Small Rubber 3 feet at $0.25 per foot 1.25 feet at $0.25 per foot Connector 1 at $0.02 1 at $0.02 At the beginning of the month, Ed Co. bought 26,000 feet of rubber for $7,540. The company made 3,000 large O rings and 4,000 small O rings. The company used 14,600 feet of rubber. A. What are the direct materials price variance, the direct materials quantity variance, and the total direct materials cost variance? Enter all amounts as positive numbers. If required round your answers to two decimal places. Direct materials price variance $? Unfavorable Direct materials quantity variance $? Unfavorable Total direct materials cost variance $? Unfavorable B. If they bought 10,000 connectors costing $210, what would the direct materials price variance be for the connectors? Round your intermediate calculations to three decimal places. Direct materials price variance $? (not 10 or 30) Unfavorable C. If there was an unfavorable direct materials price variance of $150, how much did they pay per foot for the rubber? Round your answer to two decimal places. Actual price $?

Answer 1

A1. Direct material Price Variance = Actual Quantity * Standard cost - Actual Quantity * Actual cost

Direct material Price Variance = 14600 * 0.25 - 14600 * 7540 / 26000

Direct material Price Variance = 14600 * 0.25 - 14600 * 0.29=584

Direct material Price Variance = $584 Unfavorable

Direct material Qty Variance = (Std Quantity - Actual Qty) * Standard rate

Direct material Qty Variance = (3000*3+4000*1.25 - 14600) * 0.25

Direct material Qty Variance = $150 Unfavorable

Total direct materials cost variance = Direct material Price Variance + Direct material Qty Variance

Total direct materials cost variance = 584 + 150 = 734 Unfavorable

2. Direct material Price Variance = Actual Quantity * Standard cost - Actual Quantity * Actual cost

Direct material Price Variance = 10000 * 0.02 - 210

Direct material Price Variance = $10 Unfavorable

3. Direct materials price variance = (Standard cost - Actual cost) * Actual Quantity

-150 = (0.25 - Actual cost) * 14600

Actual Cost per feet = 0.26