Question

Materials Variances Assume that Pearle Vision uses standard costs to control the materials in its made-to-order sunglasses. The standards call for 2 ounces of material for each pair of lenses. The standard cost per ounce of material is $15.75. During July, the Santa Clara location produced 5,200 pairs of sunglasses and used 9,600 ounces of materials. The cost of the materials during July was $16.50 per ounce, and there were no beginning or ending inventories. Required a. Determine the flexible budget materials cost for the completion of the 5,200 pairs of glasses. $Answer 163,800 b. Determine the actual materials cost incurred for the completion of the 5,200 pairs of glasses and compute the total materials variance. $Answer 158,400 actual materials cost $Answer 12,600 Answer total materials variance c. How much of the total variance was related to the price paid to purchase the materials? $Answer 7,200 Answer d. How much of the difference between the answers to requirements (a) and (b) was related to the quantity of materials used? (Hint: Compute materials quantity variance.) $Answer 0 Answer

Answer 1

Answer:

A. $163,800

B. $158,400

$5,400 F

C.$7,200 U

D.$12,600 F

Explanation:

A. Calculation to Determine the flexible budget materials cost for the completion of the 5,200 pairs of glasses.

Flexible budget materials cost for the completion of the 5,200 pairs

= 5200 pairs * 2 ounces * $15.75

= $163,800

b. Calculation to determine the actual materials cost incurred for the completion of the 5,200 pairs of glasses

Actual materials cost incurred for the completion of the 5,200 pairs.

= Actual material used * Actual rate

= 9,600 ounces * $16.50

= $158,400

Computation for the total materials variance

Total Material Variance = Flexible budget material cost for actual production - Actual material cost

= $163,800-$158,400

= $5,400 F

c). Calculation to determine How much of the total variance was related to the price paid to purchase the materials

Total variance was related to the price paid to purchase the materials.

Material price variance = (Standard price - Actual price) * Actual quantity

= ($15.75 - $16.50) * 9600 ounces

= $7,200 U

d) Calculation to determine How much of the difference between the answers to requirements (a) and (b) was related to the quantity of materials used

Material quantity variance = (Standard qty for actual production - Actual quantity ) * Standard rate

= (5200 * 2 ounces - 9600 ounces) * $15.75

= (10400 ounces - 9600 ounces) * $15.75

= $12,600 F