Question

The standard cost of Product B manufactured by Pharrell Company includes 2.3 units of direct materials at $6.70 per unit. During June, 26,800 units of direct materials are purchased at a cost of $6.65 per unit, and 26,800 units of direct materials are used to produce 11,500 units of Product B. (a) Compute the total materials variance and the price and quantity variances. Total materials variance $ Materials price variance $ Materials quantity variance

Answer 1

Answer:

Results are below.

Explanation:

To calculate the direct material price and quantity variance, we need to use the following formulas:

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (6.7 - 6.65)*26,800

Direct material price variance= $1,340 favorable

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Direct material quantity variance= (2.3*11,500 - 26,800)*6.7

Direct material quantity variance= $2,345 unfavorable

Now, the total variance:

Total direct material variance= Direct material price variance +/- Direct material quantity variance

Total direct material variance= 1,340 - 2,345

Total direct material variance= $1,005 unfavorable