Question

Bellingham Company produces a product that requires nine standard pounds per unit. The standard price is $6 per pound. If 6,000 units used 55,100 pounds, which were purchased at $5.82 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a. Direct materials price variance	$	Favorable
b. Direct materials quantity variance	$	Unfavorable
c. Direct materials cost variance

Answer 1

a

Direct material Price variance = Actual Quantity X (Standard price - Actual price)
=> 55100 X ($6 - $5.82)
=> 9918 Favorable

b

Direct material quantity variance = Standard price X (Standard quantity - Actual quantity)
=> $6 X [(6000 units X 9 pounds) - 55100]
=> $6 X (54000 - 55100)
=> 6600 Unfavorable

c

Direct material cost variance = (Direct material price variance + Direct material quantity variance)
=> (9918 Favorable + 6600 Unfavorable)
=> 3318 Favorable

(If there are any questions, kindly let me know in comments. If the solution is to your satisfaction, a thumbs up would be appreciated. THank You)