R 11 E11-20A Calculate missing direct material variables (Learning Objective 2)

Question

R 11 E11-20A Calculate missing direct material variables (Learning Objective 2) Last month, Talley Corporation purchased and used the same quantity of material in pro- ducing its product, speed bumps for traffic control. Complete the following table. Direct materials information Standard pounds per unit Standard price per pound Actual quantity purchased and used per unit. Actual price paid for material per pound... Direct materials price variance... Direct materials quantity variance.. Total direct material variance. Number of units produced.... Medium speed bump 15 $1.00 Large speed bump $1.80 16 $2.10 $ 1,920 U $1.80 $1,120 U $ 100 F $ 480 U 400 100

Explanation / Answer

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For Medium speed bump AQ AP AQ SP SQ SP         1,400 $       1.80         1,400 $       1.00              1,500 $       1.00 $      2,520.00 $    1,400.00 $    1,500.00 A B C DMPV A-B $      1,120.00 U DMQV C-B $         100.00 F DMV A-C $      1,020.00 U We know that Direct material price variance = AQ(AP-SP) = 1120 AQ = 1120/(AP-SP) AQ = 1120/(1.80-1.00) AQ = 1,400 SQ = 100 x 15 = 1500 For Large speed bump AQ AP AQ SP SQ SP         6,400 $       2.10         6,400 $       1.80              7,200 $       1.80 $   13,440.00 $ 11,520.00 $ 12,960.00 A B C DMPV A-B $      1,920.00 U DMQV C-B $      1,440.00 F DMV A-C $         480.00 U Using this equation , DMV = DMPV + DMQV DMQV = DMV-DMPV DMQV = 480-1920 DMQV = 1440 F Direct material quantity variance = SP(SQ-AQ) = 1440 SQ-AQ = 1440/SP 1440/SP + AQ = SQ 1440/1.8 + 6400 = SQ SQ = 7200

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