The standard cost of Product B manufactured by MIT Company includes 2.00 units o
ID: 2453666 • Letter: T
Question
The standard cost of Product B manufactured by MIT Company includes 2.00 units of direct materials at $5.50 per unit. During June, 27,100 units of direct materials are purchased at a cost of $5.27 per unit, and 27,100 units of direct materials are used to produce 13,400 units of Product B.
(a) Compute the total materials variance and the price and quantity variances.
Total materials variance $____________
Favorable, Unfavorable, or Neither favorable nor unfavorable?
Materials price variance $_____________
Favorable, Unfavorable,or Neither favorable nor unfavorable?
Materials quantity variance $____________
Favorable, Unfavorable, or Neither favorable nor unfavorable?
(b) Compute the total materials variance and the price and quantity variances, assuming the purchase price is $5.65 and the quantity purchased and used is 26,500 units.
Total materials variance $____________
Favorable, Unfavorable, or Neither favorable nor unfavorable?
Materials price variance $_____________
Favorable, Unfavorable, or Neither favorable nor unfavorable?
Materials quantity variance $_____________
Favorable, Unfavorable, or Neither favorable nor unfavorable?
Total materials variance $____________
Favorable, Unfavorable, or Neither favorable nor unfavorable?
Materials price variance $_____________
Favorable, Unfavorable,or Neither favorable nor unfavorable?
Materials quantity variance $____________
Favorable, Unfavorable, or Neither favorable nor unfavorable?
Explanation / Answer
MIT Company Limited (a) Compute the total materials variance and the price and quantity variances. Total materials variance $ 4,583 Favorable Materials price variance $ 6,233 Favorable Materials quantity variance $ 1,650 Unfavorable Total Material Variance Standard quantity x Standard price) - (Actual quantity x Actual price) = (26 800 units x $ 5.50) - (27 100 units x $ 5.27) = $ 147,400 - $ 142,817 = $ 4,583.00 favourable Material price variance Actaual quantity purchased x Standard price) - (Actual quantity purchased x Actual price) = (27 100 units x $ 5.50) - (27 100 units x $ 5.27) = $ 149,050 - $ 142,817 = $ 6,233.00 favourable Material quantity variance (Standard quantity x Standard price) - (Actual quantity x standard price) = ( (13,400 x 2) x $ 5.50) - (27 100 x $ 5.50) = $ 147,400 - $ 149,050 = $ -1,650.00 Unfavourable Total Variance $ 6,233- $ 1,650 = $ 4583 Favourable (b) Compute the total materials variance and the price and quantity variances assuming the purchase price is $ 5.65 and the quantity purchased and used is 26,500units Total materials variance $ 2,325 Unfavorable Materials price variance $ 3,975 Unfavorable Materials quantity variance $ 1,650 Favorable Total Material Variance Standard quantity x Standard price) - (Actual quantity x Actual price) = (26 800 units x $ 5.50) - (26 500 units x $ 5.65) = $ 147,400 - $ 149,725 = $ -2,325.00 Unfavourable Material price variance Actaual quantity purchased x Standard price) - (Actual quantity purchased x Actual price) = (26 500 units x $ 5.50) - (26 500 units x $ 5.65) = $ 145,750 - $ 149,725 = $ -3,975.00 Unfavourable Material quantity variance (Standard quantity x Standard price) - (Actual quantity x standard price) = ( (13,400 x 2) x $ 5.50) - (26 500 x $ 5.50) = $ 147,400 - $ 145,750 = $ 1,650.00 Favourable Total Variance $ 1,650- $ 3,975 = - $ 2,325 Unfavourable
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