The standard cost of Product B manufactured by TLC Company includes three units
ID: 2385819 • Letter: T
Question
The standard cost of Product B manufactured by TLC 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 $
Materials price variance $
Materials quantity variance $
Repeat the question above, assuming the purchase price is $5.20 and the quantity purchased and used is 26,200 units.
Total materials variance $
Materials price variance $
Materials quantity variance $
Explanation / Answer
Standard Quantity for Actual output x Standard Price/unit = (9000 x 3 x 5) = $135,000 Actual Quantity for Actual output x Standard Price/unit = (28000 x 5) = $140,000 Actual Quantity for Actual output x Actual Price/unit = (28000 x 4.7) = $131600 Total materials variance = 135000 - 131600 = 3400 Favourable Materials price variance = 140000 - 131600 = 8400 Favourable Materials quantity variance = 135000 - 140000 = 5000 Unfavourable ________________________________________________________________________ If the purchase price is $5.20 and the quantity purchased and used is 26,200 units. Standard Quantity for Actual output x Standard Price/unit = (9000 x 3 x 5) = $135,000 Actual Quantity for Actual output x Standard Price/unit = (26200 x 5) = $131,000 Actual Quantity for Actual output x Actual Price/unit = (26200 x 5.20) = $136,240 Total materials variance = 135000 - 136240 = 1240 Unfavourable Materials price variance = 131000 - 136240 = 5240 Unfavourable Materials quantity variance = 135000 - 131000 = 4000 Favourable
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