The standard cost of Product B manufactured by Pharrell Company includes 3.1 uni

Question

The standard cost of Product B manufactured by Pharrell Company includes 3.1 units of direct materials at $6.1 per unit. During June, 26,900 units of direct materials are purchased at a cost of $5.85 per unit, and 26,900 units of direct materials are used to produce 8,500 units of Product B. Compute the total materials variance and the price and quantity variances Total materials variance Materials price variance Materials quantity variance Compute the total variance and the price and quantity variances, assuming the purchase price is $6.15 and the quantity purchased and used is 26,800 units. Total materials variance Materials price variance Materials quantity variance

Explanation / Answer

(a) Total Material Variance $         3,370 Favorable Material Price Variance $         6,725 Favorable Material Quantity Variance $         3,355 Unfavorable Working: Total Material Variance = Standard Cost of material-Actual cost of material = (Actual output*Standard quantity per unit*Standard Price per unit)-(Actual Qauntity used *Actual material price per unit) = (8500*3.1*$ 6.1)-(26900*5.85) = $ 3,370 Favorable Material Price Variance = (Standard Price-Actual Price)*Actual Material used = ($ 6.10-$ 5.85)*26900 = $ 6,725 Favorable Standard Quantity = Actual Output*Standard quantity per unit = 8500*3.1 =           26,350 Material Quantity Variance = (Standard Quantity-Actual Quantity)*Standard Price per unit = (26350-26900)*$ 6.10 = $ 3,355 Unfavorable (b) Total Material Variance $         4,085 Unfavorable Material Price Variance $         1,340 Unfavorable Material Quantity Variance $         2,745 Unfavorable Working: Total Material Variance = Standard Cost of material-Actual cost of material = (Actual output*Standard quantity per unit*Standard Price per unit)-(Actual Qauntity used *Actual material price per unit) = (8500*3.1*$ 6.1)-(26800*$6.15) = $ 4,085 Unfavorable Material Price Variance = (Standard Price-Actual Price)*Actual Material used = ($ 6.10-$ 6.15)*26800 = $ 1,340 Unfavorable Standard Quantity = Actual Output*Standard quantity per unit = 8500*3.1 =           26,350 Material Quantity Variance = (Standard Quantity-Actual Quantity)*Standard Price per unit = (26350-26800)*$ 6.10 = $ 2,745 Unfavorable

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