Question

he following data relate to the direct materials cost for the production of 2,200 automobile tires: Actual: 59,100 lbs. at $1.8 per lb. Standard: 60,900 lbs. at $1.75 per lb. a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct Materials Price Variance $ Direct Materials Quantity Variance $ Total Direct Materials Cost Variance $ b. The direct materials price variance should normally be reported to the . When lower amounts of direct materials are used because of production efficiencies, the variance would be reported to the . When the favorable use of raw materials is caused by the purchase of higher-quality raw materials, the variance should be reported to the

Answer 1

Direct material price variance=(Standard cost of actual quantity-Actual cost)
	Standard cost for actual quantity=(59100*1.75) =103425
	Actual cost = 106380
	Variance=(103425-106380)
			-2955	Unfavourable

Direct material usage variance=(Standard cost of standard quantity for actual production -Standard cost of actual quantity)
		(SQ*SP) - (AQ*SP)
	SQ*SP =	60900*1.75	106575
	AQ*SP=	59100*1.75	103425
		Variance =(106575-103425)
		3150	favourable

Direct material cost variance=(Standrad cost-Actual cost)
	Standard cost (60900*1.75) =106575
	Actual cost =106380
	Vriance=(106575-106380)
		195	favourable