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Simba Company’s standard materials cost per unit of output is $8.80 (2.00 pounds x $4.40). During...

Simba Company’s standard materials cost per unit of output is $8.80 (2.00 pounds x $4.40). During July, the company purchases and uses 2,420 pounds of materials costing $13,068 in making 1,100 units of finished product.

Compute the total, price, and quantity materials variances

Solutions

Expert Solution

Solution

Total Material Variance $           3,388.00 Unfavourable-U
Material Price Variance $           2,420.00 Unfavourable-U
Material quantity variance $               968.00 Unfavourable-U

Working

Actual DATA for 1100 Units
Quantity (AQ) Rate (AR) Actual Cost
Direct Material 2420 $            5.40 $          13,068.00

.

Standard DATA for 1100 Units
Quantity (SQ) Rate (SR) Standard Cost
[A] [B] [A x B]
Direct Material ( 2 pounds x 1100 Units)=2200 pounds $                   4.40 $               9,680.00

.

Material Price Variance
( Standard Rate - Actual Rate ) x Actual Quantity
( $                    4.40 - $                     5.40 ) x 2420
-2420
Variance $             2,420.00 Unfavourable-U
Material Quantity Variance
( Standard Quantity - Actual Quantity ) x Standard Rate
( 2200 - 2420 ) x $              4.40
-968
Variance $                 968.00 Unfavourable-U
Material Spending Variance
( Standard Cost - Actual Cost )
( $            9,680.00 - $           13,068.00 )
-3388
Variance $             3,388.00 Unfavourable-U

ekkarill92 answered 1 year ago
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