Question

Exercise 23-5 The standard cost of Product B manufactured by Pharrell Company includes 3.3 units of direct materials at $5.4 per unit. During June, 26,800 units of direct materials are purchased at a cost of $5.30 per unit, and 26,800 units of direct materials are used to produce 8,000 units of Product B. (a) Compute the total materials variance and the price and quantity variances. Total materials variance Materials price variance __ी भी Materials quantity variance (b) Compute the total materials variance and the price and quantity variances, assuming the purchase price is $5.45 and the quantity purchased and used is 26,800 units. Total materials variance $ Materials price variance Materials quantity variance Click if you would like to Show Work for this question: Open Show Work

Answer 1

(a)

(1)

Total direct material variance = (standard quantity x standard price) - (actual quantity x actual price)

= (26400 x $5.4) - (26800 x $5.3)

= $142560 - $142040

= $520 Favorable

Where,

Standard quantity = actual output x standard quantity per unit of output

= 8000 x 3.3 = 26400 units

(2)

Material price variance = actual quantity purchased x (standard price - actual price)

= 26800 x ($5.4 - $5.3)

= $2680 Favorable

(3)

Material quantity variance = standard price x (standard quantity - actual quantity used)

= $5.4 x (26400 - 26800)

= $2160 Unfavorable

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(b)

(1)

Total direct material variance = (standard quantity x standard price) - (actual quantity x actual price)

= (26400 x $5.4) - (26800 x $5.45)

= $142560 - $146060

= $3500 Unfavorable

Where,

Standard quantity = actual output x standard quantity per unit of output

= 8000 x 3.3 = 26400 units

(2)

Material price variance = actual quantity purchased x (standard price - actual price)

= 26800 x ($5.4 - $5.45)

= $1340 Unfavorable

(3)

Material quantity variance = standard price x (standard quantity - actual quantity used)

= $5.4 x (26400 - 26800)

= $2160 Unfavorable