Question

Simba Company’s standard materials cost per unit of output is $9.00 (2.00 pounds x $4.50). During July, the company purchases and uses 2,420 pounds of materials costing $12,826 in making 1,100 units of finished product. Compute the total, price, and quantity materials variances. (Round per unit values to 2 decimal places, e.g. 52.75 and final answers to 0 decimal places, e.g. 52.) Total materials variance $ Materials price variance $ Materials quantity variance $ Click if you would like to Show Work for this question: Open Show Work

Answer 1

Standard materials cost for actual production = Units produced * Standard materials cost per unit = 1,100 units * $9 = $9,900

Total materials variance = Standard materials cost - Actual materials cost = $9,900 - $12,826 = $2,926 Unfavorable

Actual materials price = Cost of materials purchased / Actual pounds of materials purchased = $12,826 / 2,420 pounds = $5.3

Materials price variance = ( Standard price - Actual price ) * Actual materials used = ( $4.5 - $5.3 ) * 2,420 pounds = $1,936 Unfavorable

Standard materials quantity for actual production = Units produced * Standard quantity of materials per unit = 1,100 units * 2 pounds = 2,200 pounds

Materials quantity variance = ( Standard quantity - Actual quantity ) * Standard price = ( 2,200 pounds - 2,420 pounds ) * $4.5 = $990 Unfavorable