Question

Variance analysis Jack Joe, Inc. standard costing provided below. During 20x1, Jack Joe Inc. used 410,000 of raw materials to produce 200,000 units of finished goods. Create a two way variance analysis (5 points) and compute 1. Price variance favorable or unfavorable (5 points) 2. Quantity variance favorable or unfavorable (5 points) 3. Actual price per unit (5 points) Assumptions Year X1 Units sold 200,000 Raw material units per unit sold (standard) 2 Budgeted raw material cost per unit $1.00 Total Raw material cost variance - Unfavorable $10,000

Answer 1

Answer:

1) Direct material price variance= -5,000 or $5,000 unfavorable

2) Direct material quantity variance= $5,000 unfavorable

3) Actual price= $0.5122

Explanation:

Giving the following information:

Units produced= 200,000

Units sold= 200,000

Direct material used= 410,000

Standard quantity= 2 units of raw material

Budgeted cost= $0.5 per raw material unit

Total Raw material variance= $10,000 unfavorable

First, we need to calculate the direct material quantity variance:

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Direct material quantity variance= (400,000 - 410,000)*0.5

Direct material quantity variance= $5,000 unfavorable

Now, we can determine the direct material price variance:

Total direct material varaince= Direct material quantity variance + direct material price variance

10,000= -5,000 +

direct material price variance= -5,000 or $5,000 unfavorable

Finally, we can calculate the actual price per raw material unit:

Direct material price variance= (standard price - actual price)*actual quantity

-5,000= (0.5 - actual price)*410,000

-5,000= 205,000 - 410,000actual price

210,000/410,000= actual price

$0.5122=actual price