The following materials standards have been established for a particular product

Question

The following materials standards have been established for a particular product: Standard quantity per unit of output..... 5.2 meters Standard Price... $15.60 per meter The following data pertain to operations concerning the product for the last month Actual materials purchased.... 8,500 meters Actual cost of materials purchased ... $139,400 Actual materials used in productions ... 8,200 meters Actual output ... 1,640 meters Required: A. What is the materials price variance for the month? B. What is the materials quantity variance for the month?

Explanation / Answer

1) Material Quantity (or usage) variance - Stnd quantity per unit x units produced (5.1 g x 1,000) = 5,100 vs Actual usage 6,300 = 1,200 g x Stnd price of 11.95 = 14,340 Unfav Matl Quantity 2) Labor Efficiency variance - Stnd hrs x units produced (5 x 1,400) = 7,000 vs Actual hrs 7,300 = 300 hrs x Stnd rate of 19.85 = 5,955 Unfav Labor Efficiency 3) Variable OH Efficiency variance - Stnd hrs x units produced (6.3 x 1,100) = 6,930 vs Actual hrs 8,600 = 1,670 hrs x Stnd OH rate of 18.65 = 31,145.50 Unfav Var OH Efficiency

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