Question

Krumple Inc. produces aluminum cans. Production of 12-ounce cans has a standard unit quantity of 4.4 ounces of aluminum per can. During the month of April, 304,000 cans were produced using 1,250,000 ounces of aluminum. The actual cost of aluminum was $0.21 per ounce and the standard price was $0.12 per ounce. There are no beginning or ending inventories of aluminum. Calculate the materials price and usage variances using the columnar and formula approaches. Enter amounts as positive numbers and select Favorable or Unfavorable.

Answer 1

Answer:

Material Price Variance : $112,500 Unfavorable

Material Quantity Variance : 3,168 Favorable

Explanation:

Material Quantity Variance:

Standard quantity : 304,000 cans * 4.4 ounces = 1,337,600

Actual Quantity used : 1,311,200

Variance : 26,400 * $0.12 = $3,168 Favorable

Material Price Variance:

Standard Price : [Standard Price * Actual usage]

[$0.12  * 1,250,000] = $150,000

Actual Price [Actual Price * Actual Usage]

[$0.21 * 1,250,000] = $262,500

Variance : $112,500 UnFavorable