The standard cost of Product B manufactured by Pharrell Company includes 2.6 uni

Question

The standard cost of Product B manufactured by Pharrell Company includes 2.6 units of direct materials at $6.0 per unit. During June, 26,700 units of direct materials are purchased at a cost of $5.90 per unit, and 26,700 units of direct materials are used to produce 10,100 units of Product B.

(a)

Compute the total materials variance and the price and quantity variances.

Total materials variance $

Favorable
Unfavorable
Neither favorable nor unfavorable
Materials price variance $

Favorable
Neither favorable nor unfavorable
Unfavorable
Materials quantity variance $

Favorable
Neither favorable nor unfavorable
Unfavorable

(b)

Compute the total materials variance and the price and quantity variances, assuming the purchase price is $6.05 and the quantity purchased and used is 26,500 units.

Total materials variance $

Favorable
Neither favorable nor unfavorable
Unfavorable
Materials price variance $

Neither favorable nor unfavorable
Favorable
Unfavorable
Materials quantity variance $

Unfavorable
Neither favorable nor unfavorable
Favorable

Explanation / Answer

All Amounts in $ (a) Total Materials Variance = Standard Material Cost - Actual Material Cost Standard Material Cost = 10,100 units X 2.6 units X $ 6 per unit = 157560 $ Actual Material Cost = 26,700 units X $ 5.90 per unit = 157530 $ Thus, Total Materials Variance = $ 157,560 - $ 157,530 = $ 30 Favorable Material Price Variance = (Standard Rate per unit - Actual Rate per unit) X Actual quantity used = ($ 6 - $ 5.90) X 26,700 = 2670 $ Favorable Material Quantity Variance = (Standard Quantity - Actual Quantity) X Standard Rate per unit = (10,100 X 2.6 - 26,700) X $ 6 = -2640 $ Unfavorable (a) Total Materials Variance = Standard Material Cost - Actual Material Cost Standard Material Cost = 10,100 units X 2.6 units X $ 6 per unit = 157560 $ Actual Material Cost = 26,500 units X $ 6.05 per unit = 160325 $ Thus, Total Materials Variance = $ 157,560 - $ 160,325 = - $ 2,765 Unfavorable Material Price Variance = (Standard Rate per unit - Actual Rate per unit) X Actual quantity used = ($ 6 - $ 6.05) X 26,500 = -1325 $ Unfavorable Material Quantity Variance = (Standard Quantity - Actual Quantity) X Standard Rate per unit = (10,100 X 2.6 - 26,500) X $ 6 = -1440 $ Unfavorable

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