Question

Direct Materials Variances Bellingham Company produces a product that requires 16 standard pounds per unit. The standard price is $9 per pound. If 2,400 units required 39,600 pounds, which were purchased at $8.64 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) total direct materials cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Answer 1

Results are below.

Step-by-step explanation:

To calculate the direct material price and quantity variance, we need to use the following formula:

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (9 - 8.64)*39,600

Direct material price variance= $14,256 favorable

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Direct material quantity variance= (2,400*16 - 39,600)*9

Direct material quantity variance= -$10,800 unfavorable

Total variance= 14,256 - 10,800

Total variance= $3,456 favorable