velue: 10.00 points E9-6 Calculating Direct Materials Variances [LO 9-3] Parker
ID: 3358557 • Letter: V
Question
velue: 10.00 points E9-6 Calculating Direct Materials Variances [LO 9-3] Parker Plastic, Inc. manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows: Standard Unit Cost 3.20 0.50 0.60 Standard QuantityStandard Price (Rate) 12 sq ft 1.00 per sq. ft S 12.00 Direct materials (plastic) Direct labor 0.25 hr Variable manufacturing overhead (based on 0.25 hr. 5 12.80 per hr. $ 2.00 per hr. direct labor hours) Fixed manufacturing overhead S559,200 932,000 units) Parker Plastic had the following actual results for the past year Number of units produced and sold Number of square feet of plastic used Cost of plastic purchased and used Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 1,260.000 12,500,000 S 11,250,000 330,000 S 4,026,000 S 1,480,000 S 387,000 Required Calculate Parker Plastic's direct materials price and quantity variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Direct Material Price Variance Direct Mateantity VarianceExplanation / Answer
Solution:
Direct Material Price Variance = ( Act Qty* Std Price ) - ( Act Qty * Act Price)
= ( 12,500,000*1) - ( 11,250,000)
= 1250,000 U
Direct Material Quantity Variance = ( Std Qty * Std Price) - ( Act Qty* Std Price)
= ( 1260,000*12*1) - (12,500,000*1)
= 2,620,000 F
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