Ruby Company produces a chair for which the standard specifies 6 yards of material per unit. The standard price of one yard of material is $13.60. During the month, 7,700 chairs were manufactured, using 45,300 yards at a cost of $12.92 per yard.
Determine the following: Enter favorable variances as negative numbers.
|a. Direct materials price variance||$|
|b. Direct materials quantity variance||$|
|c. Total direct materials cost variance||$|
a. Direct Materials price variance = (Actual quantity * Actual price) - (Actual quantity * Standard price)
= (45,300 * $12.92) - (45,300 * $13.6)
= $30,804 Favorable
b. Direct Materials quantity variance = (Actual quantity * Standard price) - (Standard quantity * Standard price)
= (45,300 * $13.6) - (7,700 * 6 * $13.6)
= $12,240 Favorable
c. Total direct materials cost variance = Direct Materials price variance + Direct Materials quantity variance
= $30,804 Favorable + $12,240 Favorable
= $43,044 Favorable
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