One of the products of hearts & flowers is a one-pound boxof chocolate candy, Pa

Question

One of the products of hearts & flowers is a one-pound boxof chocolate candy, Packaged in a box bearing the customer’slogo (minimum order, 100 boxes). The standard cost of the chocolatecandy used is $2 per pound. During November, 20,000 of theseone-pound boxes were produced, requiring 20,800 pounds of chocolatecandy at a total direct materials cost of $42,640.

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

Explanation / Answer

Material Price variance = (Standard Price perunit - Actual Price per unit) x Actual Quantity Standardcost                                 =    $2.00per pound Actual cost   = $42,640 /20,800    =    $2.05 perpound Material price variance = ($2.00 - $2.05) x 20,800 pounds=  .05 x20,800   =   $1,040 U _____________________________________________________________________________________________ Material quantityvariance   =   (Actual quantity used -standard quantity allowed ) x Standard price perunit                                                =  (20,800   -   20,000)   x $2.00      =   $1600 U

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