Exercise 23-5 The standard cost of Product B manufactured by MIT Company include
ID: 2448843 • Letter: E
Question
Exercise 23-5
The standard cost of Product B manufactured by MIT Company includes 4.00 units of direct materials at $5.60 per unit. During June, 27,000 units of direct materials are purchased at a cost of $5.43 per unit, and 27,000 units of direct materials are used to produce 6,700 units of Product B.
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Exercise 23-5
The standard cost of Product B manufactured by MIT Company includes 4.00 units of direct materials at $5.60 per unit. During June, 27,000 units of direct materials are purchased at a cost of $5.43 per unit, and 27,000 units of direct materials are used to produce 6,700 units of Product B.
Explanation / Answer
Jun 1 :
Cash (db) 105,000
Cash
material price variance= PQ(AP-SP)
PQ=Quantity purchased
AP=Actual price
SP=standard price
=27000*(5.43-5.6)=4590(F)
material quantity variance=SP(AQ-Sq)
SP=standard price
AQ= actual qunatity used
sq=STANDARD QUANTITY ALLOWED
=5.6*(27000-(6700*4))
=1120(U)
total material variance=3470(F)
2) same as above but purchase price is $5.69
Jun 1 :
Cash (db) 105,000
Cash
material price variance= PQ(AP-SP)
PQ=Quantity purchased
AP=Actual price
SP=standard price
=27000*(5.69-5.6)=2430(U)
material quantity variance=SP(AQ-Sq)
SP=standard price
AQ= actual qunatity used
sq=STANDARD QUANTITY ALLOWED
=5.6*(27000-(6700*4))
=1120(U)
total material variance=3550(U)
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