Malone, Inc. manufactures one product called Tybos. The company uses a standard

Question

Malone, Inc. manufactures one product called Tybos. The company uses a standard cost system and has established the following material and labor standards to produce one unit of Tybo:

Malone estimates it would produce 6,400 units of Tybos for the month of March.

During March, the following activity was recorded by the company relating to actual
production of Tybos:

•         The company produced 6,000 units during the month.
•         A total of 16,000 pounds of materials were purchased and used at a cost of $2.75 per lb.

a & b. The Materials Price Variance for March is $. Indicate whether this variance is favorable or unfavorable .

c & d. The Materials Quantity Variance for March is $. Indicate whether this variance is favorable or unfavorable .

e &f. The Materials Flexible Budget Variance is $ Indicate whether this variance is favorable or unfavorable .

Standard Quantity Standard Price Direct materials 2.5 pounds $3 per pound Direct labor 0.6 hours $10 per hour

Explanation / Answer

a Materials Price Variance = 16000*(2.75-3)= $4000 favorable c Materials Quantity Variance = 3*(16000-6000*2.5)= $3000 unfavorable e Materials Flexible Budget Variance = (16000*2.75)-(6000*2.5*3)= $1000 favorable

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