Question

Patriot Company produces flak jackets for military use. The company recently adopted a standard costing system and set the following standards for materials per unit of product:
Materials (Ballistic Nylon): 8 yards
$4 per yard During the most recent month, Patriot produced 5,500 units of flak jackets. Actual materials purchased and used were 40,000 yards at the price of $4.20 per yard. Based on the information above, answer the following questions: L 5 points]
(1) What was the total material costs incurred by the company during the month (i.e, actual costs of materials)?
(2) What should be the total material costs allowed for the production during the month (i.e., standard costs of materials)?
(3) What is the total variance for materials to be reported during the month? Is it favorable (F) or unfavorable (U)? materials price and quantity (usage) variances below. Indicate whether each variance is favorable (F or unfavorable (U
(4) Using either the template (columnar) approach or the formula approach, compute direct

Answer 1

Answer:

Patriot Company

1. The total material costs incurred by the company during the month (actual costs of materials) = $168,000

2. The total material costs allowed for the production during the month (i.e., standard costs of materials) = $176,000

3. The total variance for materials to be reported during the month is $8,000 F.

4. The Direct material price variance is = $8,000 U

5. The Direct material quantity variance is = $16,000 F

Explanation:

a) Data and Calculations:

Standard for materials per unit:

Materials (Ballistic Nylon): 8 yards  $4 per yard = $32 per unit

Production in the most recent month = 5,500 units

Actual materials purchased and used = 40,000 yards at $4.20 per yard

1. The total material costs incurred by the company during the month (actual costs of materials) = $168,000 (40,000 * $4.20)

2. The total material costs allowed for the production during the month (i.e., standard costs of materials) = $176,000 (8 * 5,500 * $4.00)

3. The total variance for materials to be reported during the month = $8,000.  It is favorable (F)

4. Direct materials price variance = (Standard price - Actual price) * Actual quantity

= ($4.00 - $4.20) * 40,000

= $8,000 U

5. Direct materials quantity variance = Standard quantity - Actual quantity * Standard price

= (44,000 - 40,000) * $4

= 4,000 * $4

= $16,000 F