Question

Miami company has set the following standards related to the
prime costs for its single product:

                    standard quantity       standard price
direct materials    11 pounds per unit      $3.00 per pound
direct labor         8 hours per unit       $14.00 per hour

Miami Company reported the following information for the month
of September:

1.  The direct material quantity variance was $7,380 unfavorable.
2.  The direct labor rate variance was $4,410 favorable.
3.  8,140 units were produced.
4.  Direct materials were purchased at a price of $3.75 per pound.
5.  The actual rate paid to direct laborers was $13.93 per hour.
6.  At September 1, the direct materials inventory consisted of
    8,000 pounds. At September 30, the direct materials inventory
    totaled 5,000 pounds.

Calculate the direct material price variance for September. If
the variance is favorable, place a minus sign in front of your
answer (i.e., -1000). If the variance is unfavorable, enter your
answer as a number (i.e., 1000).

Answer 1

Ans: Material Quantity Variance= Standard quantity-Actual Quantity)*standard rate

7,380=8,140*11-Actual Quantity)*3

2,460=89,540-Actual Quantity

Actual Quantity= 92,000

Actual Quantity for materials purchased=5,000+92,000-8,000

Actual Quantity for materials purchased= 89,000

Materials price variance= Standard price- actual price)*Actual Quantity used

Materials price variance= 3-3.75)*89,000

Materials price variance- 0.75*89,000

Materials Price Variance=66,750 Unfavorable