Problem 9-108 [LO 9-3] Regent Corp. uses a standard cost system to account for t
ID: 2573288 • Letter: P
Question
Problem 9-108 [LO 9-3]
Regent Corp. uses a standard cost system to account for the costs of its one product. Materials standards are 2.9 pounds of material at $13 per pound, and labor standards are 3 hours of labor at a standard wage rate of $11. During July Regent Corp. produced 3,240 units. Materials purchased and used totaled 10,070 pounds at a total cost of $132,610. Payroll totaled $148,580 for 13,260 hours worked.
a. Calculate the direct materials price variance. (Do not round your intermediate calculations. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).)
b. Calculate the direct materials quantity variance. (Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).)
Explanation / Answer
Standard Quantity
2.9 Lbs
Standard Price
$13.00
Actual units produced
3240 units
Standard Quantity for Actual outputs=Standard Quantity per unit * Actual units produced
Standard Quantity for Actual outputs=2.9 Lbs * 3240 units
Standard Quantity for Actual outputs=9396 Lbs
Actual materials purchased
10070 Lbs
Actual Cost
$132,610.00
Actual price per unit
$13.17
Materials price variance: Actual quantity * (“Standard Price” Less “Actual Price”)
Materials price variance: 10070 Lbs* (“$13” Less “$13.1688”)
Materials price variance: $1700 Unfavorable
Quantity Variance= ("Standard Quantity" Less "Actual Quantity")* Standard Price
Quantity Variance= (“9396Lbs” Less “10070Lbs”)*$13
Quantity Variance= $8,762 Unfavorable
Standard Quantity
2.9 Lbs
Standard Price
$13.00
Actual units produced
3240 units
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