Question

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	$

Answer 1

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