Tip Top Corp. produces a product that requires 12 standard gallons per unit. The

Question

Tip Top Corp. produces a product that requires 12 standard gallons per unit. The standard price is $9.00 per gallon. If 5,500 units required 67,300 gallons, which were purchased at $8.46 per gallon, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance? Use the minus sign to enter favorable variances as negative numbers.

a. Direct materials price variance: $ b. Direct materials quantity variance: $ c. Direct materials cost variance:

Also, tell whether favorable or unfavorable.
$

Explanation / Answer

Material price variance = (9-8.46)*67300 = $36342 Favorable

Material quantity variance = (66000-67300)*9 = $11700 Unfavorable

Material cost variance = 9*66000 - 8.46*67300 = $24,642 Favorable

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