Asked by Reyna Nava Sanchez on Jun 15, 2024
Verified
The standards for product V28 call for 8.4 pounds of a raw material that costs $19.20 per pound. Last month, 2,300 pounds of the raw material were purchased for $43,700. The actual output of the month was 250 units of product V28. A total of 2,200 pounds of the raw material were used to produce this output. 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 Price Variance
The difference between the actual cost of materials used in production and the standard cost, reflecting changes in material prices.
Materials Quantity Variance
The difference between the expected amount of materials needed for production and the actual amount used.
- Examine and rationalize the differences in materials' cost and amount.
- Evaluate and explain the deviations in direct labor rate and efficiency measurements.
Verified Answer
JY
Jessica YoungJun 20, 2024
Final Answer :
a. Materials price variance = (Actual quantity × Actual price) − (Actual quantity × Standard price)= ${{[a(4)]:#,###}} − ({{[a(3)]:#,###}} pounds × ${{[a(2)]:#,###.00}} per pound)= ${{[a(4)]:#,###}} − ${{[a(7)]:#,###}}= ${{[a(8)]:#,###}} Favorable
b. Standard quantity = Standard quantity per unit × Actual output = {{[a(1)]:#,###.0}} pounds per unit × {{[a(5)]:#,###}} units = {{[a(9)]:#,###}} poundsMaterials quantity variance = (Actual quantity − Standard quantity) × Standard price= ({{[a(6)]:#,###}} pounds − {{[a(9)]:#,###}} pounds) × ${{[a(2)]:#,###.00}} per pound= {{[a(10)]:#,###}} pounds × ${{[a(2)]:#,###.00}} per pound= ${{[a(11)]:#,###}} Unfavorable
b. Standard quantity = Standard quantity per unit × Actual output = {{[a(1)]:#,###.0}} pounds per unit × {{[a(5)]:#,###}} units = {{[a(9)]:#,###}} poundsMaterials quantity variance = (Actual quantity − Standard quantity) × Standard price= ({{[a(6)]:#,###}} pounds − {{[a(9)]:#,###}} pounds) × ${{[a(2)]:#,###.00}} per pound= {{[a(10)]:#,###}} pounds × ${{[a(2)]:#,###.00}} per pound= ${{[a(11)]:#,###}} Unfavorable
Learning Objectives
- Examine and rationalize the differences in materials' cost and amount.
- Evaluate and explain the deviations in direct labor rate and efficiency measurements.
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