The standard cost of Product B manufactured by MIT Company includes 3.70 units o
ID: 2460150 • Letter: T
Question
The standard cost of Product B manufactured by MIT Company includes 3.70 units of direct materials at $6.30 per unit. During June, 27,300 units of direct materials are purchased at a cost of $6.08 per unit, and 27,300 units of direct materials are used to produce 7,300 units of Product B.
LINK TO TEXT
The standard cost of Product B manufactured by MIT Company includes 3.70 units of direct materials at $6.30 per unit. During June, 27,300 units of direct materials are purchased at a cost of $6.08 per unit, and 27,300 units of direct materials are used to produce 7,300 units of Product B.
Explanation / Answer
AQ=Actual Quantity
AP=Actual Price
SP=Standard Price
SQ=Standard Quantity = 7300 Unit * 3.70 Unit = 27010 Unit
Materials Price Variance = (AQ * AP) - ( AQ * SP)
=(27300 * $6.08) - (27300 * $6.30)
=$165984 - $171990
=($6006)
=Unfavorable
Materials Quantity Variance = (AQ * SP) - (SQ * SP)
=(27300 * $6.30) - (27010 * $6.30)
=$171990 - $170163
= $1827
=Favorable
Total Materials Variance = Material Price Variance + Material Quantity Variance
= ($6006) + $1827
=($4179)
=Unfavorable
Materials Price Variance = (AQ * AP) - ( AQ * SP)
=(26800 * $6.43) - (26800 * $6.30)
=$172324 - $168840
=$3484
=favorable
Materials Quantity Variance = (AQ * SP) - (SQ * SP)
=(26800 * $6.30) - (27010 * $6.30)
=$168840 - $170163
= ($1323)
=Unfavorable
Total Materials Variance = Material Price Variance + Material Quantity Variance
= $3484 + ($1323)
= $2161
= Favorable
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