Question

Canarie Jewelry produced 1,360 rings during March. The standard cost of each ounce of gold used in a ring is $1,020 per ounce. The standard quantity of material for each ring is a half ounce of gold per ring. The cost of gold purchased and used in March was $700,400 at $1,030 per ounce. Determine the material price variance and the material quantity variance for March. Indicate whether each variance is favorable or unfavorable. (Enter all variances as a positive number.)

Material price variance		$enter a dollar amount		select an option                                                          FavorableUnfavorableNeither Unfavorable nor Favorable
Material quantity variance		$enter a dollar amount		select an option                                                          Neither Unfavorable nor FavorableUnfavorableFavorable

Answer 1

Answer- 1)- Material price variance = $6800 U.

2)- Material Quantity variance = $693600 F.

Explanation- Material price variance = (Standard price – Actual price) * Actual quantity purchase

= {$1020 per ounce – $1030 per ounce}*($700400/$1030 per ounce)

= $6800 Unfavorable

Material Quantity variance = (Standard Quantity- Actual Quantity)*Standard price

=(1360 ounce – 680 ounce)*$1020 per ounce

= $693600 Favorable

Where- Standard Quantity = No. of ounces per unit*Actual output

= 1 ounce per unit *1360 units

= 1360 ounce