Question

Ceelo Company purchased (at a cost of $8,245) and used 1,700 pounds of materials during May. Ceelo’s standard cost of materials per unit produced is based on 2 pounds per unit at a cost $5.00 per pound. Production in May was 780 units. (a) Compute the total, price, and quantity variances for materials. Total Materials Variance $ Materials Price Variance $ Materials Quantity Variance $

Answer 1

Total Material Variance
Standard cost of actual production (780*2*5)	7800
Actual cost of production	8245
Total Material Variance	-445	Unfavourable
Material Price variance
Actual quantity * (Standard rate- Actual Rate)
2300* (5 - 4.85)
Material Price variance = 345 Favourable
*Standard rate = 8245/1700
Material Quantity variance
Standard rate*(Standard quantity - Actual Quantity)
5*(1560 - 1700)
Material Quantity variance = 700 Unfavourable
Standard quantity = 780*2