Question

А B I U ON A A A Question 1: rage or Triple Star Company's standard and actual costs per unit are provided below for the most recent period. During this period, 500 units were actually produced. Product Standard Cost Product Actual Cost $8.00 Metres 4 4.1 Hours 3 3.2 Materials Standard Actual Direct labour Standard Actual Variable overhead Standard Actual Total unit cost Unit Price Per Metre $2.00 $1.90 Hourly Rate $7.00 $6.50 $7.79 $21.00 $20.80 Hours Hourly Rate $6.00 2 2.2 $3.00 $3.10 $6.82 $35.41 $35.00 Required: Given the information above, compute the following variances. Also indicate if the variances are favorable or unfavorable. 1. Materials price variance 2. Materials quantity variance U.S.)

Answer 1

For Actual Units produced, Materials: Standard quantity 5oox 4m= 2.000 metres Actual Quantity = 500x4-1m = 2,050 metres Standard Rate - $8 per metre Actual Rate = $ 7.79 permetre.

Material Price Variance - (Actual Rate Standard Rate) x Actual Quantity ($7.79 - $8) +88 $7.79 x 2,050 m $ 0.21 x 2,050 $ 430.50 Favorable 81 Material quantity Variance - Standard Ratex (Actual Quantiny - Standard Quantity) - $8 (2,050 - 2,000) 50 x $8 $400 Unfavorable

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