Once of the products of Hearts and Flowers is a one-pound box of chocolate candy

Question

Once of the products of Hearts and Flowers is a one-pound box of chocolate candy, packaged in a box bearing the customer's logo(minimum order, 100 boxes). The standard cost of the chocolate cand used is $2 per pound. During November, 20,000 of the one-pound boxes were produced, requiring 20,800 pounds of chocolate candy at a total direct materials cost of $42,640.

Determine the materials price and quantity variances for November with respect to the candy used in producing this product.

How do I determine the materials price and quantitiy variances for November with respect to the candy used in producing this product?

Explanation / Answer

Direct materials price variance (MPV) formula: [Materials Price Variance = (Actual quantity purchased × Actual price) - (Actual quantity purchased × Standard price)] ie MPV= ($42640) - (20800*$2) = $1040 = $1040U.....Ans(a) Materials quantity variance (MQV) Formula: [Materials quantity variance = (Actual quantity used × Standard price) - (Standard quantity allowed × Standard Price)] ie MQV = (20800*$2) - (20000*$2) = $1600 = $1600U .....Ans (b)

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