Budgeted Production 1,000 units Actual Production 980 units Materials: Standard

Question

Budgeted Production              1,000 units                                                                                      

Actual Production                     980 units

Materials:     Standard Price Per Lb.                                              $2.00

                   Standard Pounds per completed unit                               12

                   Actual pounds purchased and used in production       11,800

                   Actual price paid for materials                               $23,000

Labor:         Standard hourly labor rate                                      $      14

                  Standard hours allowed per completed unit                     4.5

                  Actual labor hours worked                                          4,560

                  Actual total labor costs                                           $62,928

Overhead:   Actual and budgeted fixed overhead                       $27,000

                  Standard variable overhead rate          $3.50 per standard labor hour

                  Actual variable overhead costs                               $15,500

                  Overhead is appliewd on standard labor hours

A)  The direct material price variance is:

B)  The direct material quantity variance is:                         

Explanation / Answer

Direct materials price variance = actual quantity*(actual price - standard price) = 11,800*((23,000/11,800) - 2.00) = -600, which is $600 favorable Direct materials quantity variance = standard price*(actual quantity - standard quantity) = 2.00*(11,800 - 980*12) = 80, which is $80 unfavorable

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