Question

Pato Company produces leather sandals. The company employs a standard costing system and has the following standards in order to produce one pair of sandals:
TOTAL # OF UNITS=4,328

standard quantity standard price
direct materials 2 leather strips ?? per strip
direct labor 2.5 hours $10 per hour
variable overhead 2.5 hours ?? per hour

Pato purchased leather strips at a total cost of $124,520 and had direct labor totaling $117,100. During May, Pato used 18,790 leather strips in the production of sandals. Pato had no beginning inventories of any type for May. At May 31, Pato had 780 leather strips remaining in its direct materials inventory.

Pato Company reported the following variances for May:

Direct material price variance .............. $7,100 unfavorable
Direct labor rate variance .................. $29,500 favorable
Total direct labor variance ................. $8,900 unfavorable
Variable overhead spending variance ......... $2,440 favorable
Variable overhead efficiency variance ....... $34,560 unfavorable

Calculate Pato's direct material quantity variance for May. IF THE VARIANCE IS FAVORABLE, place a minus sign in front of your answer (i.e., -5000). If the variance is UNFAVORABLE, simply enter your answer as a number (i.e., 5000).

Answer 1

Answer:

Material Quantity Variance=$ 60601.32 Unfavorable

Explanation:

Pato Company

Standard Quantity = 2 strips per pair * 4328 units = 8656 strips

Actual number strips used : 18790/ 4328= 4.34 strips used per pair

Actual price paid : $ 124,520/ 19570= $ 6.36

Standard price = ?

Material Price Variance= (Actual Price * Actual Quantity)- (Standard Price * Actual Quantity)

Material Price Variance= ($ 6.36 * 18790)-( ??? * 18790)= $ 119577.02- ( ??? * 18790)

$7,100 unfavorable=$ 119577.02- ( ??? * 18790)

$ 119577.02- $7,100=( ??? * 18790)

( ??? * 18790)=112457.02

Standard Price= 112457.02/18790

Standard Price= $ 5.98

Material Quantity Variance= (Standard Price * Actual Quantity)-(Standard Price * Standard Quantity)

Material Quantity Variance=($5.98 * 18790)-($5.98 *8656 )=112364.2-51762.88

Material Quantity Variance=$ 60601.32 Unfavorable