Question

Edgar, Inc. has a materials price standard of $2.00 per pound. Six thousand pounds of materials were purchased at $2.20 a pound. The actual quantity of materials used was 6,000 pounds, although the standard quantity allowed for the output was 5,400 pounds.Edgar, Inc.'s total materials variance is

Answer 1

Answer:

Total Material Variance = $2,400 Unfavorable

Explanation:

Total Materials Variance = Standard Cost - Actual Cost

Here, standard cost = Standard Quantity $\times$ Standard Rate

Standard quantity for actual output = 5,400

Standard Rate = $2.00 per pound

Standard Cost = 5,400 $\times$ $2.00 = $10,800

Actual Cost = Actual Quantity $\times$ Actual Rate

= 6,000 $\times$ $2.20 = $13,200

Total Material Variance = $10,800 - $13,200 = - $2,400 Unfavorable

Since the value is negative the variance is unfavorable, as actual cost is more than standard cost.