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Createz Company manufactures cans for packaging food and beverage items. The company uses a standard cost...

Createz Company manufactures cans for packaging food and beverage items. The company uses a standard cost system and sells each can for $5. Createz Company estimates monthly production of cans. The following information is important for this company: (i) The company produced 1,350 units during the month. (ii) A total of 3,800 pounds of materials were purchased at a cost of $16,500. (iii) Standard Material usage is ½ lb of material at a cost per pound is $5. Per pound. Required: Calculate the following variances for Createz Company. a. Materials Price Variance b. Materials Quantity Variance c. Total Material Variance (4 Marks each)

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Answer #1
Material price variance
(actual price - standard price)* AQ purchased
(16500   - 3800*5)
2500 F
Material Quantity variance
(Actual Qty used - standard qty allowed)*standard rate
(3800          - 1350*.5)*5
15625 U
total material variance
2500F+15625U
13125 U
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