The standard cost of Product B manufactured by TLC Company includes 3 units of d
ID: 2349850 • Letter: T
Question
The standard cost of Product B manufactured by TLC Company includes 3 units of direct materials at $6.45 per unit. During June, 28,000 units of direct materials are purchased at a cost of $6.06 per unit, and 28,000 units of direct materials are used to produce 9,000 units of Product B.Compute the total materials variance and the price and quantity variances.
Total materials variance $ unfavorable or favorable?
Materials price variance $ unfavorable or favorable?
Materials quantity variance $ unfavorable or favorable?
Repeat the question above, assuming the purchase price is $6.71 and the quantity purchased and used is 26,200 units.
Total materials variance $ unfavorable or favorable?
Materials price variance $ unfavorable or favorable?
Materials quantity variance $ unfavorable or favorable?
Explanation / Answer
Actual quantity = 28,000
Actual price = 6.06
Standard price = 6.45
Standard quantitiy = 9,000*3 = 27,000
Materials price variance = Actual quantity*(Actual price - Standard price) = 28,000(6.06 - 6.45) = -10,920, which is 10920 favorable
Materials Quantity variance = Standard price*(Actual quantitiy - Standard quantity) = 6.45(28,000 - 27,000) = 6450, which is 6450 unfavorable
Total direct material variance = materials price variance + materials quantity variance = 10920 favorable + 6450 unfavorable = 4470 favorable
Answer:
Total materials variance $4470 favorable
Materials price variance $10920 favorable
Materials quantity variance $6450 unfavorable
Question 2:
Actual quantity = 26,200
Actual price = 6.71
Standard price = 6.45
Standard quantity 9,000*3 = 27,000
Materials price variance = Actual quantity*(Actual price - Standard price) = 26,200*(6.71 - 6.45) = 6812, which is 6812 unfavorable.
Materials quantity variance = standard price *(actual quantity - standard quantity) = 6.45(26,200 - 27,000) = -5160, which is 5160 favorable.
Total materials variance = 6812 unfavorable + 5160 favorable = 1652 unfavorable
Answer:
Total materials variance $1652 unfavorable
Materials price variance $6812 unfavorable
Materials quantity variance $5160 favorable
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