rcrfoct Pct Collar Company makes custom Icather pet colars. The company cxpects

Question

rcrfoct Pct Collar Company makes custom Icather pet colars. The company cxpects cach collar to require 1.70 toct of Icather and precicts lcather ll cost 52 90 pcrfot Supposc Pcfcct et made 55 collars of leather per collar and paid 52.40 par foot 2 90 por toot. Suppose 65 collars ctually during Fctruary. Fort hcsc the company a acragcd 1.90 1cct 1. Calculate the standard direct materials cost per unit (Round your answer to 2 decimal places. oer Colar 2. Without perrorming any caiculations, determine whether the cirect materials price variance will be favorable or unfaarable 3. Without perrorming any caculations, detenmine whether the cirec: materials quantity variance wll be tavorable or unfavorable. 6, Calculate the droct matenals prioc and quantry varianoCs. (Round your intermediate calculations and tinal answers to 2 decimal places, Indicate the ettect of each vaniance by selectng "F" tor tavorable, "u" tor untavorable. Diract Material Prica Varlanca Direct Material Quanity Variance

Explanation / Answer

Solution 1:

Standard Direct Materail Required per unit of Collar = 1.70 feet of leather

Standard price of material per foot = $2.90

Standard Direct Material Cost per unit = Standard Direct material required per unit * Standard price of Material

= 1.70 * 2.90 = $4.93

Soltution 2:

Since Standard price of direct material ($2.90) is higher than the actual price ($2.40), therefore the direct material price variance will be favourable.

Solution 3:

Since Standard quantity of direct material (1.70 feet) is lower than the actual quantity (1.90 feet), therefore the direct material quantity variance will be unfavourable.

Solution 4:

Standard price of direct material = $2.90

Actual price of Direct material = $2.40

Standard Quantity of Direct Material = 1.70 feet * 65 collars = 110.50 feet

Actual Quantity of Direct Material = 1.90 feet * 65 collars = 123.50 feet

Direct Material price Variance = (Standard price - actual price) * Actual Quantity

= (2.90 - 2.40) * (65*1.90)

= 0.50 * 123.50 = $61.75 (Favourable)

Direct Material Quantity Variance = (Standard Quantity - Actual Quantity) * Standard Price

= (110.50 - 123.50) * $2.90

= -13 * 2.90 = $37.70 (Unfavourable)

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