The Banjax Corporation used 131,000 kilos of copper in actual production, at a total cost of $1,548,000. Original production had been budgeted with a standard direct material quantity of 5.7 kilos per product unit at a standard price of $12 per kilo. Actual production was 23,500 product units.
a) Calculate the direct materials price variance. b) Calculate the direct materials quantity variance.
Standard Price per kg =$12 per kg | |
Standard quantity =23,500 units*5.70 kg =133,950 kg | |
Actual Price per kg =$1,548,000 / 131,000 =$11.81679389 per kg | |
Actual quantity =131,000 kg | |
Material Price variance = (Standard price - Actual Price)*Actual quantity | |
Material Price variance = ($12*131,000) - $1,548,000 =$24,000(Favourable) | |
Material quantity variance = Standard price(Standard Quantity - Actual Quantity) | |
Material quantity variance = $12*(133,950 kg - 131,000 kg) =$35,400(Favourable) | |
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