The standard cost of Product B manufactured by MIT Company includes 3.00 units o
ID: 2504468 • Letter: T
Question
The standard cost of Product B manufactured by MIT Company includes 3.00 units of direct materials at $5.40 per unit. During June, 26,800 units of direct materials are purchased at a cost of $5.23 per unit, and 26,800 units of direct materials are used to produce 8,800 units of Product B.
Compute the total materials variance and the price and quantity variances.
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Compute the total materials variance and the price and quantity variances, assuming the purchase price is $5.47 and the quantity purchased and used is 26,700 units.
Total Materials Variance
Materials Price Variance
Materials Quantity Variance
Explanation / Answer
Materials Price Vriance=Actual Quantity*(Actual Rate-Standard Rate)=26,800*(5.23-5.40)=$4556 F
Materials Quantity Vriance=STandard Rate*(Actual Quantity-Standard Quantity)=5.40*(26800-8800*3)=$2160 U
Total Materials Variance=Materials Price Vriance+Materials Quantity Vriance=$4556 F+$2160 U=$2396 F
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