Perfect Pet Collar Company makes custom leather pet collars. The company expects

Question

Perfect Pet Collar Company makes custom leather pet collars. The company expects each collar to require 2.30 feet of leather and predicts leather will cost $4.10 per foot. Suppose Perfect Pet made 80 collars during February. For these 80 collars, the company actually averaged 2.40 feet of leather per collar and paid $3.65 per foot. Required 1. Calculate the standard direct materials cost per unit. (Round your answer to 2 decimal places.) Direct Ma per Collar 2. Without performing any calculations, determine whether the direct materials price variance will be favorable or unfavorable. Material Price 3. Without performing any calculations, determine whether the direct materials quantity variance will be favorable or unfavorable. 6.Calculate the direct materials price and quantity variances. (Round your intermediate calculations and final answers to 2 decimal places. Indicate the effect of each variance by selecting"F for favorable, "U" for unfavorable.) Direct Material Price Variance Direct Material Quantity Variance

Explanation / Answer

Answer 1

Standard Direct Material cost per unit = 2.30 feet * $4.10 foot = $9.43

Answer 2

The actual price paid for leather per foot ie $3.65 is less than the standard price for leather per foot ie $4.10 . Therefore direct material price variance will be favorable.

Answer 3

The actual quantity requirement for leather per unit of collor is foot ie 2.40 feet is more than the expected standard quantity requirement for leather per unit ie 2.30 feet . Therefore direct material quantity variance will be unfavorable.

Answer 6

Direct material price variance :

(Standard unit price of DM - Actual unit price of DM ) * Actual quantity of DM used

= ($4.10 - $3.65) * (2.40 feet * 80) = $86.40 Favorable

Direct material quantity variance :

(Standard quantity of DM allowed - Actual quantity of DM used ) * Standard price of DM

= (2.30 feet - 2.40 feet) * ( 80 * $4.10) = $32.80 Unfavorable

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