The standard cost of Product B manufactured by Pharrell Company includes 2.0 uni

Question

The standard cost of Product B manufactured by Pharrell Company includes 2.0 units of direct materials at $5.0 per unit. During June, 26,500 units of direct materials are purchased at a cost of $4.95 per unit, and 26,500 units of direct materials are used to produce 13,200 units of Product B.

(a)

Compute the total materials variance and the price and quantity variances.

(b)

Compute the total materials variance and the price and quantity variances, assuming the purchase price is $5.05 and the quantity purchased and used is 26,500 units.

Neither favorable nor unfavorableFavorableUnfavorable

Total materials variance $

FavorableUnfavorableNeither favorable nor unfavorable

Materials price variance $

Neither favorable nor unfavorableFavorableUnfavorable

Materials quantity variance $

Neither favorable nor unfavorableUnfavorableFavorable

Explanation / Answer

a Total materials variance =(26500*4.95)-(13200*2*5)= 825 Favorable Materials price variance =26500*(4.95-5)= 1325 Favorable Materials quantity variance=5*(26500-13200*2)= 500 Unfavorable b Total materials variance =(26500*5.05)-(13200*2*5)= 1825 Unfavorable Materials price variance =26500*(5.05-5)= 1325 Unfavorable Materials quantity variance=5*(26500-13200*2)= 500 Unfavorable

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