Question

Regent Corp uses a standard cost system to account for the costs of its one product. Materials standards are 2.8 pounds of material at $13 per pound and 2 hours of labor at a standard wage rate of $9. During July Regent Corp produced 3,250 units. Materials purchased and used totaled 10,030 pounds at a total cost of $131,940. Payroll totaled $147,780 for 13,200 hours worked.
a.Calculate the direct materials price variance. (Do not round your intermediate calculations. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).)
Price Variance____________.
b. Calculate the direct materials quantity variance. (Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).)

Quantity Variance_____________.

Answer 1

Answer:

1,550 Unfavorable; 12,090 Unfavorable

Explanation:

(a) Direct materials price variance:

= (Standard rate - Actual rate)   × Actual quantity

= [$13 - ($131,940 ÷ 10,030) ]   × 10,030

= 1,550 Unfavorable

(b) Direct materials quantity variance:

= (Standard quantity - Actual quantity) × standard rate

= [(3,250 × 2.8) - 10,030] × $13

= 12,090 Unfavorable