Question

QS 21-8 Materials variances LO P2 Tercer reports the following for one of its products. $2 per lb.) Direct materials standard (4 lbs. Actual direct materials used (1) Actual inlated units produced Actual cost of direct materials used $ per finished unit 340.000 lbs. 72.000 units $612.000 AQ - Actual Quantity SQ - Standard Quantity AP - Actual Price SP Standard Price Compute the direct materials price and quantity variances and classify each as favorable or unfavorable Actual Cost Standard Cost

Answer 1

Answer

Actual Cost								Standard Cost
AQ	x	AP		AQ	x	SP		SQ	x	SP
340,000	x	$                     1.80		340,000	x	$            2.00		288,000	x	$               2.00
	$                    612,000.00				$               680,000.00				$                   576,000.00
Price Variance - Material			$               68,000.00	Quantity Variance - Material			$            104,000.00

Direct material Price Variance	$               68,000.00	Favourable
Direct material Quantity Variance	$            104,000.00	Unfavourable
Total Direct material Variance	$               36,000.00	Unfavourable