4. Norio Manufacturing uses powdered plastics (PPS) to manufacture a high-pressu
ID: 2476565 • Letter: 4
Question
4.
Norio Manufacturing uses powdered plastics (PPS) to manufacture a high-pressure board used in a digital equipment product, Flex 10. Information concerning its operation in June is as follows:
Budgeted units of Flex 10 for June
5,000
Budgeted usage of PPS
45,000 pounds
Number of units of Flex 10 manufactured
4,000
PPS purchased
43,200 pounds
PPS used
39,000 pounds
Total actual cost of PPS used
$224,640
Direct materials usage variance—unfavorable
$21,600
The direct materials purchase-price variance (rounded to a whole number) is:
Budgeted units of Flex 10 for June
5,000
Budgeted usage of PPS
45,000 pounds
Number of units of Flex 10 manufactured
4,000
PPS purchased
43,200 pounds
PPS used
39,000 pounds
Total actual cost of PPS used
$224,640
Direct materials usage variance—unfavorable
$21,600
Explanation / Answer
** Actual price = 224640 /39000 = 5.76
**Usage variance = SR (AQ -SQ)
21600 =SR(39000- 36000) [45000*4000/5000=36000]
21600 = 3000 SR
SR = 21600/3000
= $ 7.2
Material purchas eprice variance =Actual quantity purchased (AP -SP)
= 43200 ( 5.76 - 7.2)
= 43200 * -1.44
= - 62208 F
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