Answer:
Material Price Variance= $ 11640 favorable
Material Quantity Variance= $6800 Unfavorable
Explanation:
Becton Labs, Inc.
Standard Quantity= 2.6ounce * 3600 units = 9360 ounces
Actual quantity used: Purchases Less Ending Inventory 13000 ounces- 3300 ounces= 9700 ounces
Actual price : $244,400/13,000= $ 18.8
Standard price : $ 20.00
Material Price Variance= (Actual Price * Actual Quantity)- (Standard Price * Actual Quantity)
Material Price Variance= ($ 18.80 * 9700)-($20.0 *9700)= $ 182360- $ 194000= 11640 Favorable
Material Price Variance= $ 11640 favorable
Material Quantity Variance= (Standard Price * Actual Quantity)-(Standard Price * Standard Quantity)
Material Quantity Variance=($20 *9700)-($ 20 * 9360)
Material Quantity Variance=$ 194000-187200= 6800
Material Quantity Variance= $6800 Unfavorable
Total direct materials variance= $ 11640 favorable
-$6800 Unfavorable
Total direct materials variance= 4840 favorable
2. Yes they should as he is offering less price than the standard price.
Even if more material is used the total material variance is favorable indicating a gain not a loss.
