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nasty-shy [4]
3 years ago
6

The following data relate to the direct materials cost for the production of 50,000 automobile tires: Actual: 725,000 lbs. at $3

.00 per lb. Standard: 730,000 lbs. at $2.95 per lb. a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Business
1 answer:
Afina-wow [57]3 years ago
3 0

Answer and Explanation:

a. The computation of the material price variance is shown below:

= Actual Quantity × (Standard Price - Actual Price)

= 725,000 × ($2.95- $3)

= 725,000 × $0.5

= $36,250 unfavorable

b. The computation of the material quantity variance is shown below:

= Standard Price × (Standard Quantity - Actual Quantity)

= $2.95 × (730,000 - 725,000)

= $2.95 × 5,000

= $14,750 favorable

And, the total direct material cost variance is

= Material price variance + material cost variance

= $36,250 unfavorable + 14,750 favorable

= $21,500 unfavorable

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