The standard cost of Product B manufactured by MIT Company Indudes 3.90 units of
ID: 2459921 • Letter: T
Question
The standard cost of Product B manufactured by MIT Company Indudes 3.90 units of direct materials at $6.70 per unit. During June, 27,300 units of direct materials are purchased at a cost of $6.47 per unit, and 27,300 units of direct materials arc used to produce 6,900 units of Product B. Compute the total materials variance and the price and quantity variances. Compute the total materials variance and the price and quantity variances, assuming the purchase price Is $6.83 and the quantity purchased and used Is 26,700 units. By accesing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor.Explanation / Answer
a)
Material price variance:
= Actual quantity×Standard cost per unit-Actual cost
= $27,300×$6.70-27,300×$6.47
= $6,279 Favorable
Material quantity variance:
= Standard quantity×Standard cost per unit- Actual quantity×Standard cost per unit
= 6,900×3.90×$6.70-27,300×$6.70
= $2,613 Unfavorable
Total material variance:
= $6,279 Favorable+$2,613 Unfavorable
= $3,666 favorable
b)
Material price variance:
= Actual quantity×Standard cost per unit-Actual cost
= $26,700×$6.70-26,700×$6.83
= $3,471 Unavorable
Material quantity variance:
= Standard quantity×Standard cost per unit- Actual quantity×Standard cost per unit
= 6,900×3.90×$6.70-26,700×$6.70
= $1,407 Favorable
Total material variance:
= $1,407 Favorable+$3,471 Unfavorable
= $2,064 Unfavorable
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