The standard cost of product B manufactured by TLC company includes three units

Question

The standard cost of product B manufactured by TLC company includes three units of direct materials at $6 per unit. During June 28000 units of direct materials are purchased at a cost of $5.64 per unit, and 28000 units of direct materials are used to produce 9000 units of product B.

a- Using the info above. Compute the total materials variance and the price and quantity variances.

b- Repeat the question above, assuming the purchase price at $6.24 and the quantity purchased and used is 26,200 units.

Explanation / Answer

A)Price variance 10080 F (6-5.64)* 28,000 Quantity variance 6000U (28,000-3*9000)*6 Total 4080 F B) Price variance 6288 U (6-6.24)*26,200 Quantity variance 4800F (26,200-27,000)*6 Total 1488 U

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