lampton Corporation uses a standard cost system. The company has established the
ID: 2451027 • Letter: L
Question
lampton Corporation uses a standard cost system. The company has established the following standard for the materials costs of one unit of product Standard Quantity Standard Price Standard Cost 6.0 pounds $7.80/pound $46 80 During February, the company purchased 173,000 pounds of direct material at a total cost of $1.366,700 The company manufactured 33,000 units of product during February using 199,320 pounds of direct materials The materials quantity variance for February is O $10.428 unfavorable $10.296 unfavorable O $10,428 favorable O $10,296 favorable. O $10,428 unfavorable.
Explanation / Answer
1)
Materials usage/quantity variance = (Actual Quantity Used- Standard Quantity)Standard Price
Materials usage/quantity variance = (199320 - 33000*6)*7.80
Materials usage/quantity variance = $ 10296 Unfavorable
2)
Materials price variance = (Actual price - Standard Price) *Actual Quantity Purchased
Materials price variance = (1267500/169000 - 7.4)*169000
Materials price variance = $ 16900 Unfavorable
3)
Materials usage/quantity variance = (Actual Quantity Used- Standard Quantity)Standard Price
Materials usage/quantity variance = (6180 - 1350*8.2)*15.30
Materials usage/quantity variance = $ 74817 Favorable
Note : You have calculated the wrong in Question No 2 , Material Price Variance is calculated on Actual Quatity Purchase
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