Question

Crane Companyplanned to use 1 yard of plastic per unit budgeted at $91 a yard. However, the plastic actually cost $90 per yard. The company actually made 4100 units, although it had planned to make only 3300 units. Total yards used for production were 4160. How much is the total materials variance?

Answer 1

$1300 U

Step-by-step explanation:

Budgeted cost of plastic per yard = $91

Actual cost of the plastic per yard = $90

Actual units made = 4100

Budgeted units to be made = 3300

Actual plastic used = 4160 yards

Now,

Materials quantity variance

= ( Budgeted material - Actual material ) × Actual cost

= ( 1 × 4100 - 4160 ) × $90

= -$5,400 [Here negative sign means unfavorable ]

Materials price variance = ( Budgeted cost - Actual cost ) × Actual units

= ( $91 - $90 ) × 4100

= $4100

Therefore,

Total material variance = $4,100 - $5,400

= - $1,300

i.e $1300 U