The standard cost of Product B manufactured by Mateo Company includes three unit

Question

The standard cost of Product B manufactured by Mateo Company includes three units of direct materials at $5.00 per unit. During June, 28,000 units of direct materials are purchased at a cost of $4.70 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 $ FavorableUnfavorable
Materials price variance $ UnfavorableFavorable
Materials quantity variance $ FavorableUnfavorable







Repeat the question above, assuming the purchase price is $5.20 and the quantity purchased and used is 26,200 units.
Total materials variance $ UnfavorableFavorable
Materials price variance $ FavorableUnfavorable
Materials quantity variance $ UnfavorableFavorable







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Explanation / Answer

Total Material Variance = $3,400 Favorable Material Price Variance = $8,400 Favorable Material Quantity Variance = $5,000 Unfavorable Working: Material Price Variance: Material Price Variance = Actual Quantity * (Standard Price - Actual Price) = 28000 * ( 5 - 4.7) = 28000 * 0.3 = $8,400 Favorable Material Quantity Variance: Actual Quantity for producing 9000 units of product "B" = 28000 units Standard Quantity for producing 1 unit of product "B" 3 uints material = 9000 * 3 = 27000 Material Quantity Variance = (Actual Quantity - Standard Quantity) * Standard Price = (28000 - 27000) * 5 = 1000 * 5 = $5,000 Unfavorable Total Material Variance = (Standard Quantity * Standard Price) - (Actual Quantity * Actual Price) = (27000 * 5) - (28000 * 4.7) = 135000 - 131600 = $3,400 Favorable Working: Total Material Variance = -$1,240 Unfavorable Material Price Variance = -$5,240 Unfavorable Material Quantity Variance = $4,000 Favorable Working: Material Price Variance = Actual Quantity * (Standard Price - Actual Price) = 26200 * (5 - 5.2) = 26200 * -0.2 = -$5,240 Unfavorable Material Quantity Variance = (Actual Quantity - Standard Quantity) * Standard Price = (26200 - 27000) * 5 = 800 * 5 = $4,000 Favorable Total Material Variance = (Standard Quantity * Standard Price) - (Actual Quantity * Actual Price) = (27000 * 5) - (26200 * 5.2) = 135000 - 136240 = -$1,240 Unfavorable Total Material Variance = -$1,240 Unfavorable Material Price Variance = -$5,240 Unfavorable Material Quantity Variance = $4,000 Favorable Working: Material Price Variance = Actual Quantity * (Standard Price - Actual Price) = 26200 * (5 - 5.2) = 26200 * -0.2 = -$5,240 Unfavorable Material Quantity Variance = (Actual Quantity - Standard Quantity) * Standard Price = (26200 - 27000) * 5 = 800 * 5 = $4,000 Favorable Total Material Variance = (Standard Quantity * Standard Price) - (Actual Quantity * Actual Price) = (27000 * 5) - (26200 * 5.2) = 135000 - 136240 = -$1,240 Unfavorable
Thank you....    Total Material Variance = $3,400 Favorable Material Price Variance = $8,400 Favorable Material Quantity Variance = $5,000 Unfavorable Working: Material Price Variance: Material Price Variance = Actual Quantity * (Standard Price - Actual Price) = 28000 * ( 5 - 4.7) = 28000 * 0.3 = $8,400 Favorable Material Quantity Variance: Actual Quantity for producing 9000 units of product "B" = 28000 units Standard Quantity for producing 1 unit of product "B" 3 uints material = 9000 * 3 = 27000 Material Quantity Variance = (Actual Quantity - Standard Quantity) * Standard Price = (28000 - 27000) * 5 = 1000 * 5 = $5,000 Unfavorable Total Material Variance = (Standard Quantity * Standard Price) - (Actual Quantity * Actual Price) = (27000 * 5) - (28000 * 4.7) = 135000 - 131600 = $3,400 Favorable

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