Question

Total Materials Variance

Krumple Inc. produces aluminum cans. Production of 12-ounce cans has a standard unit quantity of 4.7 ounces of aluminum per can. During the month of April, 450,000 cans were produced using 1,875,000 ounces of aluminum. The actual cost of aluminum was $0.10 per ounce and the standard price was $0.08 per ounce. There are no beginning or ending inventories of aluminum.

Required:

Calculate the total variance for aluminum for the month of April. Enter amount as a positive number and select Favorable or Unfavorable.
$ ____________________?

Answer 1

Standard price = $0.08 per ounce

Standard quantity = 4.7 ounces per unit

Actual output = 450,000 units

Standard quantity for actual output = Standard quantity x Actual output

= 4.7 x 450,000

= 2,115,000 ounces

Actual price = $0.10 per ounce

Actual Quantity = 1,875,000 ounces

Total material variance = (Standard price x Standard quantity for actual output) – (Actual price x Actual Quantity)

= (0.08 x 2,115,000) - (0.10 x 1,875,000)

= 169,200 - 187,500

= $18,300 (Unfavorable)