The standard cost of Product B manufactured by Gomez Company includes three unit

Question

The standard cost of Product B manufactured by Gomez Company includes three units of direct materials at $5.00 per unit. During June, the company purchases 28,000 units of direct materials at a cost of $4.70 per unit and uses 28,000 units of direct materials to produce 9,000 units of Product B Calculate the total direct materials variance Is it favourable or unfavourable? Calculate the direct materials price variance: Is it favourable or unfavourable? Calculate the direct materials quantity variance: 3 Is it favourable or unfavourable?

Explanation / Answer

1-

total direct material variance

(SP x SQ) – (AP x AQ)

(27000*5)-(28000*4.7)

3400

Favorable

2-

Direct material price variance

Direct materials price variance = (SP – AP) x AQ

(5-4.7)*28000

8400

Favorable

3-

Direct material quantity variance

SP x (SQ – AQ)

5*(27000-28000)

-5000

Unfavorable

1-

total direct material variance

(SP x SQ) – (AP x AQ)

(27000*5)-(28000*4.7)

3400

Favorable

2-

Direct material price variance

Direct materials price variance = (SP – AP) x AQ

(5-4.7)*28000

8400

Favorable

3-

Direct material quantity variance

SP x (SQ – AQ)

5*(27000-28000)

-5000

Unfavorable

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