Question

Speedway Tees is a manufacturer of T-shirts. The standard amount of 100% cotton jersey fabric used to make each T-shirt is 2.70 yards. The standard price per yard of the fabric is $2.76. During last month, Speedway purchased 6,100 yards of the jersey fabric for $13,420. The production department used 5,100 yards to produce 1,900 T-shirts during the month.

Compute the material price and quantity variances. (Round answers to 0 decimal places, e.g. 125. Enter all variances as a positive number.)

Material Price Variance $

UnfavorableFavorableNeither Unfavorable nor Favorable

Material Quantity Variance $

FavorableNeither Unfavorable nor FavorableUnfavorable

Answer 1

Answer :-

1. Material Price Variance = Actual quantity purchased *(SP - AP)

Material Price Variance = 6,100 * ($2.76 - $2.20)

Material Price Variance = $3,416 Favorable

2. Material Quantity Variance = Standard Price *(SQ - AQ)

Material Quantity Variance = $2.76 * ( 5,130 - 5,100)

Material Price Variance = $82.8 or $83 Favorable

Working:-

Actual Price (AP) = $13,420 / 6,100 = $2.20

Standard Quantity ( SQ) = 1,900 * 2.70 = 5,130

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