Question

Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows: Standard Quantity Standard Price (Rate) Standard Unit Cost Direct materials (plastic) 15 sq ft. $ 0.90 per sq. ft. $ 13.50 Direct labor 0.25 hr. $ 12.60 per hr. 3.15 Variable manufacturing overhead (based on direct labor hours) 0.25 hr. $ 1.80 per hr. 0.45 Fixed manufacturing overhead $539,400 ÷ 930,000 units) 0.58 Parker Plastic had the following actual results for the past year: Number of units produced and sold 1,240,000 Number of square feet of plastic used 12,400,000 Cost of plastic purchased and used $ 9,920,000 Number of labor hours worked 328,000 Direct labor cost $ 3,968,800 Variable overhead cost $ 1,350,000 Fixed overhead cost $ 385,000 Required: Calculate Parker Plastic’s direct materials price and quantity variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)

Answer 1

		Standard Qty	Standard Rate	Standard Cost			1	Material Price Variance:
	Direct Material	15.00	0.90	13.50				(Standard Price-Actual Price)* Actual Quantity
								(0.90-0.80)*12400000
	Actual Units Produced	1240000						1240000	F
	Standard Cost for Actual Production:
		Standard Qty	Standard Rate	Standard Cost			2	Material Usage Variance:
	Direct Material	1,86,00,000	0.90	1,67,40,000				(Standard Qty-Actual Qty)* Standard Price
								(18600000-12400000)*0.90
	Actual Cost for Actual Production:							5580000	F
		Actual Qty	Actual Rate	Actual Cost
	Direct Material	1,24,00,000	0.80	99,20,000
			(Cost/Qty)