Question

Ruby Company produces a chair for which the standard specifies 5 yards of material per unit. The standard price of one yard of material is $7.50. During the month, 8,500 chairs were manufactured, using 43,600 yards at a cost of $7.55 per yard.

Answer 1

given,

Standard price = $ 7.50

8,500 chairs were manufactured, using 43,600 yards at a cost of $7.55 per yard.

Price Variance = Actual Quantity x (Actual Rate - Standard Rate)

= 43,600 x (7.55 - 7.50)

= 2180 (U)

Quantity Variance = Standard Rate x (Actual Quantity - Standard Quantity)

= 7.5 x (43600 - 8500 x 5)

= 8250 (U)

Cost Variance = 2180+ 8250 = 10430 (U)