Asked by Mohamad Nassar on May 07, 2024
Verified
The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: The direct materials purchases variance is computed when the materials are purchased.
Required:
a.What is the materials price variance for the month?
b.What is the materials quantity variance for the month?
Materials Standards
Benchmarks or specifications set for the quality, quantity, and cost of materials used in production to achieve performance and efficiency goals.
Direct Materials Purchases Variance
This term refers to the difference between the actual cost of materials purchased and the expected (standard) cost of materials needed to manufacture the products during a specific period.
Materials Price Variance
The difference between the actual cost of materials and the expected (standard) cost.
- Examine the differences in material costs and the deviations in quantities of materials.
Verified Answer
= $116,435 - (7,300 pounds × $16.90 per pound)
= $116,435 - $123,370
= $6,935 F
b.SQ = Standard quantity per unit × Actual output = 9.4 pounds per unit × 740 units = 6,956 pounds
Materials quantity variance = (AQ − SQ)× SP
= (7,100 pounds - 6,956 pounds)× $16.90 per pound
= (144 pounds)× $16.90 per pound
= $2,433.60 U
Learning Objectives
- Examine the differences in material costs and the deviations in quantities of materials.
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