Question

Squeaky Clean produces commercial strength cleansing supplies. Two of its main products are window cleanser that uses​ ammonia, and floor cleanser that uses bleach. Information for the most recent period​ follows: Product Names Window Cleaner​ (ammonia) Floor Cleaner​ (bleach) Direct materials information Standard ounces per unit 12 oz. 29 oz. Standard price​ (SP) per ounce $ 1.00 ​? Actual quantity​ (AQ) used per unit 26 oz. 25 oz. Actual price​ (AP) paid for material $ 1.50 $ 0.94 Actual quantity purchased​ (AQP) and used 1 comma 400 oz. 3 comma 000 oz. Price variance ​? $ 870 U Quantity variance $ 6 comma 300 U ​? Flexible budget variance ​? $ 950 F Number of units produced 300 700 What is the direct materials flexible budget variance for​ ammonia?

Answer 1

Answer:

The direct materials flexible budget variance for​ ammonia is $7,000 Unfavorable

Explanation:

In order to calculate the direct materials flexible budget variance for​ ammonia first we need to Calculate Direct Material Price Variance  as follos:

Direct Material Price Variance = Actual Material Purchased(Actual Rate - Standard Rate)

Direct Material Price Variance = 1,400 * ($1.50 - $1.00)

= $700 (Unfavorable)

Therefore, in order to calculate the Direct Material Flexible Budget Variance we would have to use the folloiwng formula:

Direct Material Flexible Budget Variance = Direct Material Price Variance + Direct Material Quantity Variance

Flexible Budget Variance for Ammonia = $700 (U) + $6,300 (U)

= $7,000 (Unfavorable)

The direct materials flexible budget variance for​ ammonia is $7,000 Unfavorable