Question

33 E9-8 (Algo) Calculating Direct Materials Variances [LO 9-3) Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows: 10 points Standard Unit Cost $9.96 2.62 Standard Standard Price Quantity 12 sq ft. 0.25 hr (Rate) 0.83 per sq. ft. $10.50 per hr. Direct materials (plastic) Direct labor variable manufacturing overhead (based on direct labor hours) Fixed manufacturing overhead $345,800 910,000 units) Skipped $2.20 per hr. 0.55 0.25 hr. 0.38 oBook Parker Plastic had the following actual results for the past year Print Number of units produced and sold Number of square feet of plastic used Cost of plastic purchased and used Nunber of labor hours worked Direct labor cost 1,040,000 11,400,000 $ 9,120,000 References 308,000 $3,449,600 689,000 Variable overhead cost Fixed overhead cost 365,000 Required: Calculate Parker Plastic's direct materials price and quantity variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Direct Material Price Variance Direct Material Quantity Variance Mc Graw Hl toxation Prev 3 of 8 Next

Answer 1

Answer with working is given below

Direct Material Variances Direct Material Price Variance $342,000 Favourable Direct Material Quantity Variance $896,400 Favourable Direct Material Price Variance = ( Standard Rate - Actual Rate) * Actual Quantity Direct Material Quantity Variance = ( Standard Quantity for Actual production - Actual Quantity) * Standard Rate Working note Actual price Actual Quantity Actual Price Actual Quantity Standard Price Standard cost Standard Quantity Standard Price X 11,400,000 $0.80 11,400,000 $9,120,000 $0.83 12,480,000 $9,462,000 $0.83 $10,358,400 Direct Material price variance Direct Material Quantity variance $342,000 Favourable $896,400 Favourable Total Direct Material cost Variance $1,238,400 Favourable