irect Materials Variances a. Determine the direct materials price variance, dire
ID: 2449714 • Letter: I
Question
irect Materials Variances
a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
b. The direct materials price variance should normally be reported to the
. If lower amounts of direct materials had been used because of production efficiencies, the variance would be reported to the . If the favorable use of raw materials had been caused by the purchase of higher-quality raw materials, the variance should be reported to the .
Price variance $Explanation / Answer
a) Price Variance = (Actual cost - standard cost) * Actual quantity
= ( $2.60 - $2.50) * 2400
= $240
Quantity Variance = (Actual quantity - standard quantity) * standard cost
= (2400 - 2473) * $2.50
= $183
Note : standard quantity = 2400units / 53500 lbs * 55120 lbs = 2473units
Total direct material cost variance =( standard quantity* standard price) - ( actual quantity * actual price)
=( 2473 * $2.50) - (2400 * $2.60)
= 6183 - 6240
= $57
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