Question

Dark Wind manufactures decorative weather vanes that have a standard materials cost of two pounds of raw materials at $2.50 per pound. During September 9,500 pounds of raw materials costing $3.25 per pound were used in making 4,700 weather vanes.

Determine the materials price and quantity variance.

Answer 1

We calculated the material price variance and the material quantity variance for Dark Wind's weather vanes. The material price variance is $7,125 Unfavorable, and the material quantity variance is $250 Unfavorable.

Step-by-step explanation:

The student's question pertains to calculating the material price variance and the material quantity variance for Dark Wind's decorative weather vanes.

The standard cost of materials is set at two pounds per weather vane at $2.50 per pound. During September, the actual materials used were 9,500 pounds at a cost of $3.25 per pound to manufacture 4,700 weather vanes.

Material Price Variance is calculated by the formula: (Actual Price - Standard Price) × Actual Quantity Used. So, the material price variance would be: ($3.25 - $2.50) × 9,500 = $0.75 × 9,500 = $7,125 Unfavorable.

Material Quantity Variance is calculated by the formula: (Actual Quantity Used - Standard Quantity Allowed) × Standard Price. For 4,700 weather vanes, the standard quantity allowed would be 4,700 × 2 = 9,400 pounds. The variance is therefore: (9,500 - 9,400) × $2.50 = 100 × $2.50 = $250 Unfavorable.