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 $7.0 per unit. During June, 27,300 units of direct materials are purchased at a cost of $6.75 per unit, and 27,300 units of direct materials are used to produce 10,400 units of Product B.

(a)

Compute the total materials variance and the price and quantity variances, show if favorable, unfavorable, or neither.


(b)

Compute the total materials variance and the price and quantity variances, assuming the purchase price is $7.05 and the quantity purchased and used is 26,700 units, show if favorable, unfavorable, or neither.

Total materials variance $

Materials price variance $

Materials quantity variance $

Total materials variance $

Materials price variance $

Materials quantity variance $

Explanation / Answer

Production Unit Material units Cost per material unit                                     1.00                     2.60                                     7.00 Actual unit                         10,400.00 Qty. Price Std         27,040.00                                     7.00    189,280.00 Actual         27,300.00                                     6.75    184,275.00       (5,005.00) Direct Material price Variance (AP - SP) x AQ (6.75-7)*27300 -0.25*27300                         (6,825.00) F Direct Material Usage/qty Variance (AQ - SQ) x SP (27300-27040)*7 260*7                            1,820.00 U Total Direct Material Variance ((AP x AQ)-(SP x SQ)   184275-189280                         (5,005.00) F

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