Question

Bowie Sporting Goods manufactures sleeping bags. The manufacturing standards per sleeping bag, based on 5,000 sleeping bags per month, are as follows: Direct material of 5.00 yards at $5.50 per yard Direct labor of 3.00 hours at $16.00 per hour Overhead applied per sleeping bag at $18.00 In the month of April, the company actually produced 4,900 sleeping bags using 25,700 yards of material at a cost of $6.10 per yard. The labor used was 11,500 hours at an average rate of $20.50 per hour. The actual overhead spending was $96,200. Determine the materials price variance and round to the nearest whole dollar. Enter a favorable variance as a negative number. Enter an unfavorable variance as a positive number.

Answer 1

Solution:
	Material price variance	$15,420
Working Notes:
	Material price variance	'= (Actual price per Yard - Standard price per yard) x Actual yards of material used
		=($6.10 - $5.50) x 25,700
		=$0.60 x 25,700
		=$15,420
		=$15,420    Unfavorable
	Since, material price variance is positive it means actual price paid is more than standard price & that is Unfavorable for the company.
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