Question

Under normal conditions, Sarah spends $8.40 per unit of materials, and it will take 3.60 units of material per pair of shoes. During July, Sole Purpose Shoe Company incurred actual direct materials costs of $61,321 for 6,890 units of direct materials in the production of 2,200 pairs of shoes.

Complete the following table, showing the direct materials variance relationships for July for Sole Purpose Shoe Company. If required, round your answers to two decimal places. When entering variances, use a negative number for a favorable cost variance, and a positive number for an unfavorable cost variance.

Actual Cost								Standard Cost
Actual Quantity	X	Actual Price		Actual Quantity	X	Standard Price		Standard Quantity	X	Standard Price
	X	$			X	$			X	$
	= $				= $				= $
			Direct Materials   Variance:				Direct Materials   Variance:
			$				$
					Total Direct Materials   Variance:
					$

Answer 1

Std qty             3.60

Std Price             8.40

Actual cost         61,321

Actual material           6,890

Actual Prod           2,200

Actual Price             8.90

(61,321 / 6890)

Actual Cost

Actual Quantity * Actual Price

6,890 * $ 8.90

= $61,321

Standard Cost

Standard Quantity * Standard Price

7,920 * $ 8.40

= $66,528

Actual Quantity * Standard Price

= 6,890 * $ 8.40

= $57,876

Direct Material Price Variance

= (Actual Quantity * Actual Price) - (Actual Quantity * Standard Price)

= $66,528 - $57,876

= $3,445 (U)

Total Direct Material Variance

= (Actual Quantity * Actual Price) - (Standard Quantity * Standard Price)

= $61,321 - $66,528

= $(5,207) (F)