Jay Enterprises reports the following information regarding the production of on

ID: 2497390 • Letter: J

Question

Jay Enterprises reports the following information regarding the production of one of its products for the month. Compute the direct materials cost variance, the direct materials price variance, the direct materials quantity variance and identify each as either favorable or unfavorable.

Direct materials standard (6 lbs. @ $3/lb.)

$18 per finished unit

Actual direct materials used

179,000 lbs.

Actual finished units produced

30,000 units

Actual cost of direct materials used

$554,900

Direct materials standard (6 lbs. @ $3/lb.)

$18 per finished unit

Actual direct materials used

179,000 lbs.

Actual finished units produced

30,000 units

Actual cost of direct materials used

$554,900

Explanation / Answer

solution :

direct material

Quantity

rate

total

180000

540,000

standard

179,000

3.10

554,900

actual

(554900/179000)

direct materials cost variance

(standard cost - actual cost)

(540000-554900)

- 14,900.00

unfavourable

direct materials price variance

(standard price-actual price)xactual quantity

(3-3.10)x179000

- 17,900.00

unfavourable

direct materials quantity variance

(standard quantity - actual quantity)xstandard price

(180000-179000)x3

3000

favourable