Exercise 23-5 The standard cost of Product B manufactured by Pharrell Company in
ID: 2570899 • Letter: E
Question
Exercise 23-5 The standard cost of Product B manufactured by Pharrell Company includes 3.5 units of direct materials at $5.1 per unit. During June, 27,300 units of direct materials are purchased at a cost of $4.90 per unit, and 27,300 units of direct materials are used to produce 7,700 units of Product B. Compute the total materials variance and the price and quantity variances Total materials variance Materials price variance Materials quantity variance s Compute the total materials variance and the price and quantity variances, assuming the purchase price is $5 5 and the quantity purchased and used S 70 unit Total materials variance Materials price variance Materials quantity variance s Click if you would like to Show Work for this question: Open Show WorkExplanation / Answer
(a)
Material Price variance = (actual price per unit - standard price per unit) x actual purchase = ($4.90 / unit - $5.10 / unit) x 27300 units = $5460 F
Actual quantity used = 27300 units of material
Standard quantity for actual output = 7700 units x 3.5 units of material per unit = 26950 units of material
Material Quantity variance = (actual quantity used - standard qyantity for actual production) x standard cost per unit = (27300 unit - 26950 unit) x $5.10/unit = $1785 U
b)
Total Material Variance = actual cost - standard cost for actual production = 26700 x $5.15 - 26950 x $5.1 = $60 U
Material Price variance = (actual price per unit - standard price per unit) x actual purchase = ($5.15 / unit - $5.10 / unit) x 26700 units = $1335 U
Material Quantity variance = (actual quantity used - standard qyantity for actual production) x standard cost per unit = (26700 unit - 26950 unit) x $5.10/unit = $1275 F
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