Exercise 15-5 The standard cost of Product B manufactured by Bramble Company inc

Question

Exercise 15-5 The standard cost of Product B manufactured by Bramble Company includes 2.40 units of direct materials at $5.10 per unit. During June, 27,000 units of direct materials are purchased at a cost of $4.85 per unit, and 27,000 units of direct materials are used to produce 11,100 units of Product B Compute the total materials variance and the price and quantity variances Total materials variance Materials price variance Materials quantity variance Compute the total materials variance and the price and quantity variances, assuming the purchase price is $5.15 and the quantity purchased and used is 26,600 units Total materials variance Materials price variance Materials quantity variance

Explanation / Answer

a)

Actutal quantity AQ = 27000

Acutal price per unit material AP = 4.85

Standard price per unit of material = 5.10

Material price variance = AQ*(AP-SP)

= 27000 * (4.85-5.10)

= 6750 Favourable

Standard quantity of material SQ = 11000 * 2.4 = 26400

Material quantity variance = SP * (AQ-SQ)

= 5.1 * (27000-26400)

= 3060 Unfavourable

total material variance = material price variance + material quantity variance

= 6570 F - 3060 U

= 3690 Favourable

b)

AQ = 26600

AP = 5.15

SP = 5.1

Material price variance= 26600 * (5.15-5.1)

= 1330 unfavourable

Material quantity variance= 5.1 * (26600 - 26400)

= 1020 unfavourable

total material varaince = 1330 + 1020 = 2350 Unfavourable

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