Question

Direct Materials Variances

The following data relate to the direct materials cost for the production of 2,200 automobile tires:

Actual:	54,000 lb. at $1.90
Standard:	55,600 lb. at $1.95

a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Price variance	$
Quantity variance	$
Total direct materials cost variance	$

Answer 1

a.

Price variance = Actual quantity x ( Standard price - Actual price)

= 54,000 x (1.95-1.90)

= 54,000 x 0.05

= -$2,700

Quantity variance = Standard price x ( Standard quantity - Actual quantity)

= 1.95 x (55,600-54,000)

= 1.95 x (1,600)

= -$3,120

Total direct material cost variance = ( Standard price x Standard quantity) - ( Actual price x Actual quantity)

= (1.95 x 55,600) - (1.90 x 54,000)

= 108,420-102,600

= -$5,820

Price variance	-$2,700	favorable
Quantity variance	-$3,120	favorable
Total direct materials cost variance	-$5,820	favorable