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Bellingham Company produces a product that requires 2.5 standard pounds per unit. The standard price is...

Bellingham Company produces a product that requires 2.5 standard pounds per unit. The standard price is $3.75 per pound. If 15,000 units used 36,000 pounds, which were purchased at $4.00 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. a. Direct materials price variance $ b. Direct materials quantity variance $ c. Direct materials cost variance $

Solutions

Expert Solution

(a) Price Variance = (Standard price - Actual Price)*Actual quantity of materials used
= (3.75-4.00)*36000
= $ 9,000
(b) Quantity Variance = (Standard quantity of materials used - Actual quantity of materials used)*Standard price of material
= (37500-36000)*3.75
= $ -5,625
Working:
Standard quantity of materials used = Actual output*Standard quantity of material per unit of output
= 15000*2.5
=        37,500
(c) Cost variance = Price Variance + Quantity Variance
= $         9,000 + $   -5,625
= $ 3,375

ekkarill92 answered 1 year ago
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