Question

In: Accounting

Parallel Enterprises has collected the following data on one of its products. During the period the...

Parallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. What is the direct materials price variance?

Direct materials – standard (7 kg. @ $2.40/kg)

$16.80 per finished unit

Actual cost of materials purchased

$402,500

Actual direct materials purchased and used

158,000 lbs
a.

$23,300 U
b.

$23,300 F
c.

$40,800 F
d.

$40,800 U
e.

$17,500 U

Parallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. What is the direct materials quantity variance?

Direct materials – standard (7 kg. @ $2.40/kg)

$16.80 per finished unit

Actual cost of materials purchased

$402,500

Actual direct materials purchased and used

158,000 lbs
a.

$23,300 U
b.

$40,800 F
c.

$40,800 U
d.

$20,000 U
e.

$17,500 F

Solutions

Expert Solution

Answer to 1 is A

Direct Material Price Variance = (Standard Rate - Actual Rate) x Actual Quantity
                                                             = ( 2.40 - 402500/158000 ) x 158000
                                                             = 23300 Unfav

Answer to 2 is B

Direct Material Quantity Variance = (Standard Quantity - Actual Quantity) x Standard Rate
                                                             = ( 25000 x 7 - 158000 ) x 2.40
                                                             =40800 Fav

ekkarill92 answered 1 year ago
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