Question

Direct Materials Variances

Bellingham Company produces a product that requires five standard pounds per unit. The standard price is $4 per pound. If 3,000 units used 15,500 pounds, which were purchased at $3.8 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a. Direct materials price variance	$
b. Direct materials quantity variance	$
c. Direct materials cost variance	$

Answer 1

positive number.

a. Direct materials price variance	-$3100 Favorable
b. Direct materials quantity variance	$2000 Unfavorable
c. Direct materials cost variance	-$1100 Favorable

Explanations :-

(a) Direct materials price variance :-

(AR - SR) * AQ

($3.8 - $4) * 15500 pound = -$3100 Favorable

(b) Direct materials quantity variance :-

(AQ - SQ) * SR

SQ = Actual output * SQ per unit

= 3000 units * 5 pound = 15000 pound

(15500 - 15000) * $4 = $2000 Unfavorable

(c) Direct Material Cost Variance:-

Actual Cost - Standard cost

(15500 pound * $3.80) - (15000 pound * $4) = -$1100 Favorable