Question

the following materials standards have been established for a particular product: standard quantity per unit of output 9.4 pounds standard price $16.90 per pound the following data pertain to operations concerning the product for the last month: actual materials purchased 7,300 pounds actual cost of materials purchased $116,435 actual materials used in production 7,100 pounds actual output 740 units the direct materials purchases variance is computed when the materials are purchased. required: what is the materials price variance for the month? what is the materials quantity variance for the month

Answer 1

The materials price variance for the month is $6,935 favorable, and the materials quantity variance for the month is $2,430 unfavorable.

Step-by-step explanation:

To calculate the materials price variance for the month, we compare the standard price to the actual price paid for the materials. The standard price is $16.90 per pound, whereas the actual cost of the materials purchased was $116,435 for 7,300 pounds. The actual price per pound is therefore $116,435 / 7,300 pounds = $15.95 per pound.

The material price variance is calculated as: (Standard Price - Actual Price) × Actual Quantity Purchased. Substituting the values gives us: ($16.90 - $15.95) × 7,300 = $6,935 favorable, since the actual price is less than the standard price.

Next, the materials quantity variance compares the standard quantity to the actual quantity used for the actual output. The standard quantity for the actual output of 740 units is 9.4 pounds per unit × 740 units = 6,956 pounds. The actual materials used were 7,100 pounds. The materials quantity variance is calculated as: (Standard Quantity - Actual Quantity) × Standard Price. Substituting the values gives us: (6,956 - 7,100) × $16.90 = $2,430 unfavorable, since the actual quantity used is more than the standard quantity.