Question

Simba Company’s standard materials cost per unit of output is $10.25 (2.50 pounds x $4.10). During July, the company purchases and uses 2,400 pounds of materials costing $12,720 in making 1,200 units of finished product.

Compute the total, price, and quantity materials variances. (Round per unit values to 2 decimal places, e.g. 52.75 and final answers to 0 decimal places, e.g. 52.)

		enter a dollar amount rounded to 0 decimal places		select an option                                                          Neither favorable nor unfavorableFavorableUnfavorable
		enter a dollar amount rounded to 0 decimal places		select an option                                                          Neither favorable nor unfavorableFavorableUnfavorable
		enter a dollar amount rounded to 0 decimal places		select an option                                                          UnfavorableFavorableNeither favorable nor unfavorable

Answer 1

Part 1) TOTAL MATERIAL VARIANCE

= Actual cost of Actual output - Standard cost of Actual output

= 12720 - (1200*10.25)

= 12720 - 12300 = $420 unfavorable

Part 2) MATERIAL PRICE VARIANCE

= ( Actual price - Standard price)*Actual quantity

=( 5.3 - 4.10)* 2400 =$2880 unfavorable

W.note ---- Actual price = Total cost/ Actual pounds

=12720/2400 =$5.3

3) MATERIAL QUANTITY VARIANCE

= (Actual quantity - Standard quantity)*standard price

= ( 2400 - 1200*2.5) * 4.10

= $ 2460 favorable