The standard cost of Product B manufactured by TLC Company includes 3 units of d

Question

The standard cost of Product B manufactured by TLC Company includes 3 units of direct materials at $6.60 per unit. During June, 28,000 units of direct materials are purchased at a cost of $6.20 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 $________ Materials price variance $________ Materials quantity variance $________ Repeat the question above, assuming the purchase price is $6.86 and the quantity purchased and used is 26,200 units Total materials variance $_______ Materials price variance $_______ Materials quantity variance $________

Explanation / Answer

Material Price Variance = 28000*(6.20-6.60) = 11200 (F) Material Quantity Variance = 6.60*(28000 - 27000) = 6600 (U) Total materials variance = 11200 - 6600 = 4600 (F) Part B Material Price Variance = 26200*(6.86-6.60) = 6812 (U) Material Quantity Variance = 6.60*(26200 - 27000) = 5280 (F) Total materials variance = - 6812 + 5280 = 1532 (U) Thanks, Aman

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