Question

Acoma, Inc., has determined a standard direct materials cost per unit of $7.20 (2 feet × $3.60 per foot). Last month, Acoma purchased and used 4,550 feet of direct materials for which it paid $15,925. The company produced and sold 2,110 units during the month.

Calculate the direct materials price, quantity, and spending variances. (Round your intermediate calculations to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)

Answer 1

	a)	Direct materials price variance
		(Actual price- standard price)*Actual qty purchased
		(15,925    - 4550*3.60)
		455	F
	b)	Direct materials quantity variance
		(AQ used - Standard qty allowed)*Standard price
		(4550         - 2110*2)*3.60
		1188	U
	c)	Direct material spending variance
		15450U+9000U
		733	U