Exercise 23-5 The standard cost of Product B manufactured by Pharrell Company in

Question

Exercise 23-5

The standard cost of Product B manufactured by Pharrell Company includes 3.7 units of direct materials at $6.2 per unit. During June, 27,100 units of direct materials are purchased at a cost of $6.10 per unit, and 27,100 units of direct materials are used to produce 7,200 units of Product B.

(a)

Compute the total materials variance and the price and quantity variances.

Total materials variance $

Favorable
Unfavorable
Neither favorable nor unfavorable
Materials price variance $

Unfavorable
Favorable
Neither favorable nor unfavorable
Materials quantity variance $

Neither favorable nor unfavorable
Favorable
Unfavorable

(b)

Compute the total materials variance and the price and quantity variances, assuming the purchase price is $6.30 and the quantity purchased and used is 27,000 units.

Total materials variance $

Neither favorable nor unfavorable
Favorable
Unfavorable
Materials price variance $

Favorable
Neither favorable nor unfavorable
Unfavorable
Materials quantity variance $

Favorable
Unfavorable
Neither favorable nor unfavorable

Explanation / Answer

a Total materials variance=(27100*6.1)-(7200*3.7*6.2)= $142 Unfavorable Materials price variance=27100*(6.1-6.2) = $2710 Favorable Materials quantity variance=6.2*(27100-7200*3.7)= $2852 Unfavorable b Total materials variance=(27000*6.3)-(7200*3.7*6.2)= $4932 Unfavorable Materials price variance=27000*(6.3-6.2) = $2700 Unfavorable Materials quantity variance=6.2*(27000-7200*3.7)= $2232 Unfavorable

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