Question

Direct Materials Variances

Bellingham Company produces a product that requires 15 standard pounds per unit. The standard price is $7 per pound. If 3,100 units used 44,600 pounds, which were purchased at $7.21 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

a. Direct materials price variance	?	Unfavorable
b. Direct materials quantity variance	?	Favorable
c. Direct materials cost variance	?	Favorable

Answer 1

a. Direct materials price variance = (Actual quantity * Actual price) - (Actual quantity * Standard price)

= (44,600 * $7.21) - (44,600 * $7)

= $9,366 Unfavorable

b. Direct materials quantity variance = (Actual quantity * Standard price) - (Standard quantity * Standard price)

= (44,600 * $7) - (3,100 * 15 * $7)

= $13,300 Favorable

c. Direct materials cost variance = (Actual quantity * Actual price) - (Standard quantity * Standard price)

= (44,600 * $7.21) - (3,100 * 15 * $7)

= $3,934 Favorable