Question

Direct Materials Variances

The following data relate to the direct materials cost for the production of 2,100 automobile tires:

Actual:	51,900 lbs. at $1.75 per lb.
Standard:	52,900 lbs. at $1.70 per lb.

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.

Direct Materials Price Variance	$
Direct Materials Quantity Variance	$
Total Direct Materials Cost Variance	$

b. The direct materials price variance should normally be reported to the  . When lower amounts of direct materials are used because of production efficiencies, the variance would be reported to the  . When the favorable use of raw materials is caused by the purchase of higher-quality raw materials, the variance should be reported to the  .

Answer 1

Direct Materials Price Variance = (1.75 - 1.70)51,900

=2,595 (unfavorable)

Direct Materials Quantity Variance = (51,900 - 52,900)1.70

-1,700(Favorable)

Total Direct Materials Cost Variance = 2,595 - 1700 = 895 (Unfavorable)

2.The direct materials price variance should normally be reported to the Purchasing Department . When lower amounts of direct materials are used because of production efficiencies, the variance would be reported to the Production Supervisor . When the favorable use of raw materials is caused by the purchase of higher-quality raw materials, the variance should be reported to the Purchasing Department