Question

Bellingham Company produces a product that requires 5 standard pounds per unit. The standard price is $7 per pound. If 2,900 units required 13,900 pounds, which were purchased at $7.14 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

Answer- a)-Total Direct Materials cost variance= $2254 F.

b)-Direct Materials price variance= $1946 U.

c)- Direct Materials Quantity variance = $4200 F..

Explanation-

a)- Total Direct Materials cost variance = Standard cost-Actual costs

= (14500 pounds*$7.00 per pound)-(13900 pounds*$7.14 per pound)

= $101500-$99246

= $2254 Favorable.

b)- Direct Materials price variance = (Standard price – Actual price) * Actual quantity purchased

= ($7.00 per pound – $7.14 per pound)*13900 pounds

= $1946 Unfavorable

c)- Direct Materials Quantity variance = (Standard Quantity- Actual Quantity)*Standard price

=(14500 pounds –13900 pounds)*$7.00 per pound

= $4200 Favorable

Where:-

Standard Quantity = No. of pounds per unit*Actual output

= 5 pounds per unit *2900 units

= 14500 pounds