Question

The standard cost of manufacturing a roller blade includes 2 units of direct materials at $10.00 per unit. During July, the company buys 11,000 units of direct materials at $9.50 and uses those materials to produce 5,000 units. Determine: A. Total materials variance B. Materials price variance C. Materials quantity variance

Answer 1

A. Total materials variance :

= Standard total cost of direct materials -  Actual total cost of direct materials used

= (5,000 units * 2 units of dm * $10) - (11,000 units * $9.50)

= $100,000 - $104,500 =  $4,500 Unfavorable

B. Materials price variance

= (Standard price per unit of direct material - Actual price per unit of direct material) * Actual quantity of direct materials used.

= ($10 - $9.50) * 11,000 units = $5,500 Favorable

C. Materials quantity variance :

= ( Standard quantity of direct materials allowed - Actual quantity of direct materials used)  * Standard price per unit of direct material

[ (5,000 units * 2 units of dm) -  11,000 units ] * $10 = $10,000 Unfavorable

answered by: anonymous