Question

Direct Materials Variances

The following data relate to the direct materials cost for the production of 1,800 automobile tires:

Actual:	52,000 lbs. at $1.9	$98,800
Standard:	50,400 lbs. at $1.95	$98,280

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	-2600	Favorable	=52000*(1.9-1.95)
Quantity variance	3120	Unfavorable	=1.95*(52000-50400)
Total direct materials cost variance	520	Unfavorable	=98800-98280
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