The following data relate to the direct materials cost for theproduction of 4,00
ID: 2433916 • Letter: T
Question
The following data relate to the direct materials cost for theproduction of 4,000 automobile tires: Actual: 130,240 pounds at$1.65 $214,896 Standard: 128,760 pounds at$1.85 $238,206 a. Determine the price variance, quantity variance, and totaldirect materials cost variance. b. To whom should the variances be reported for analysis andcontrol? Please someone help, I'm lost. The following data relate to the direct materials cost for theproduction of 4,000 automobile tires: Actual: 130,240 pounds at$1.65 $214,896 Standard: 128,760 pounds at$1.85 $238,206 a. Determine the price variance, quantity variance, and totaldirect materials cost variance. b. To whom should the variances be reported for analysis andcontrol? Please someone help, I'm lost.Explanation / Answer
a. Determine the price variance, quantity variance, and totaldirect materials cost variance.DM PriceVariance = (SP - AP)x AQ = ($1.85- $1.65) x130,240 = $26,048Favorable DM QuantityVariance = (AQx SP) - (SQ x SP) = (130,240x $1.85) - (128,760 x $1.85) = $240,944 -$238,206 = $2,738Unfavorable DM Total CostVariance = Standardmaterials cost - Actual materials cost = $238,206-$214,896 = $23,310Favorable DM QuantityVariance = (AQx SP) - (SQ x SP) = (130,240x $1.85) - (128,760 x $1.85) = $240,944 -$238,206 = $2,738Unfavorable DM Total CostVariance = Standardmaterials cost - Actual materials cost = $238,206-$214,896 = $23,310Favorable
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