Eastern Polymers, Inc., processes a base chemical into plastic. Standard costs a

Question

Eastern Polymers, Inc., processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 7,200 units of product were as follows: Standard Costs Actual Costs Direct materials 10,100 lbs. at $4.90 10,000 lbs. at $4.70 Direct labor 1,800 hrs. at $17.30 1,840 hrs. at $17.70 Factory overhead Rates per direct labor hr., based on 100% of normal capacity of 1,880 direct labor hrs.: Variable cost, $4.40 $7,840 variable cost Fixed cost, $7.00 $13,160 fixed cost Each unit requires 0.25 hour of direct labor. Required: a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Price variance $

Quantity variance $

Total direct materials cost variance $

Explanation / Answer

a)
Direct material price=(PQ*AP)-(PQ*SP)
PQ=Actual material
AP=Actual price
SP=standard price
=10000*(4.7-4.9)
=-2000 and it favourable

2b)Direct material quantity=SP(AQ-Sq)  
SP=standard price
AQ= actual qunatity used
SQ=STANDARD QUANTITY ALLOWED
=4.9*(10000-10100)
=-490 and it is favourable
Total direct material cost variance=-2000-490=-2490 and it is favourable

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