Question

The following materials standards have been established for a particular product: Standard quantity per unit of output Standard price 9.2 grams $14.70 per gram The following data pertain to operations concerning the product for the last month: Actual materials purchased.. Actual cost of materials purchased. Actual materials used in production... Actual output 5,500 grams $76,450 5,100 grams 540 units The direct materials purchases variance is computed when the materials are purchased. Required: a. What is the materials price variance for the month? b. What is the materials quantity variance for the month?

Answer 1

Answer:

Instructions are below.

Explanation:

Giving the following information:

Standard quantity per unit= 9.2 grams

Standard price= $14.70 per gram

Actual materials purchased= 5,500 grams

The actual cost of materials= $76,450

Actual materials used in production= 5,100 grams

Actual output= 540 units

To calculate the direct material variances, we need to use the following formulas:

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

Actual price= 76,450/5,500= $13.9

Direct material price variance= (14.7 - 13.9)*5,500= $4,400 favorable

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

Standard quantity= 540*9.2= 4,968 grams

Direct material quantity variance= (4,968 - 5,100)*14.7= $1,940.4 unfavorable