Question

Direct Materials Variances

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

Actual:	60,300 lbs. at $1.75	$105,525
Standard:	58,500 lbs. at $1.8	$105,300

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.

Price variance	$
Quantity variance	$
Total direct materials cost variance	$

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

Answer 1

a

Price variance

-3015

Favorable

=60300*(1.75-1.8)

Quantity variance

3240

Unfavorable

=1.8*(60300-58500)

Total direct materials cost variance

225

Unfavorable

=105525-105300

b

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