Question

Bellingham Company produces a product that requires 7 standard pounds per unit. The standard price is $3 per pound. If 2,600 units required 17,700 pounds, which were purchased at $3.12 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) total direct materials cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Direct Materials Variances Bellingham Company produces a product that requires 7 standard pounds per unit. The standard price is $3 per pound. If 2,600 units required 17,700 pounds, which were purchased at $3.12 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) total direct materials cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. a. Direct materials price variance b. Direct materials quantity variance $ c. Total direct materials cost variance

Answer 1

Standard Price per pound =$3
Standard quantity =2600 units*7 =18,200 pounds
Actual Price per pound =$3.12
Actual quantity =17,700 pounds
Material Price variance = (Standard price - Actual Price)*Actual quantity
Material Price variance = ($3 - $3.12)*17,700 =$2,124(U)
Material quantity variance = Standard price(Standard Quantity - Actual Quantity)
Material quantity variance = $3(18,200 pounds - 17,700 pounds) =$1,500(F)
Material cost variance =(Standard price*Standard quanity) - (Actual price*Actual quantity)
Material cost variance =($3*18,200 pounds) - ($3.12*17,700 pounds)
Material cost variance =$54,600 - $55,224 =$624(U)