Question

Charlatte Company has determined that the standard cost to manufacture its product includes 2 units of direct materials at $6.00 per unit. During January, the company purchased 51,300 units of direct materials at a cost of $5.80 per unit and used 51,300 units of direct materials to produce 23,900 units of its product.

Calculate the total materials variance, and the price and quantity variances.
a) $14,300 Favorable, $1,02,300 Unfavorable, $1,16,600 Favorable
b) $14,300 Unfavorable, $1,02,300 Favorable, $1,15,000 Favorable
c) $12,900 Favorable, $2,300 Favorable, $1,16,600 Unfavorable
d) $12,900 Unfavorable, $2,300 Unfavorable, $1,15,000 Unfavorable

Answer 1

The total materials variance is $297,528. The price variance is -$10,260. The quantity variance is -$10,260.

Step-by-step explanation:

The total materials variance can be calculated by subtracting the standard cost of materials from the actual cost of materials. The standard cost of materials is calculated by multiplying the standard quantity of materials by the standard cost per unit. In this case, the standard quantity of materials is 2 units and the standard cost per unit is $6.00, so the standard cost of materials is $12.00. The actual cost of materials can be calculated by multiplying the actual quantity of materials by the actual cost per unit. In this case, the actual quantity of materials is 51,300 units and the actual cost per unit is $5.80, so the actual cost of materials is $297,540. The total materials variance is then calculated as actual cost of materials minus standard cost of materials, which is $297,540 - $12.00 = $297,528.

The price variance can be calculated by subtracting the standard cost of materials from the actual cost of materials using the standard quantity of materials and the actual price per unit. In this case, the standard quantity of materials is 2 units and the actual price per unit is $5.80, so the price variance is ($5.80 - $6.00) * 51,300 units = -$10,260.00.

The quantity variance can be calculated by subtracting the standard cost of materials from the actual cost of materials using the actual quantity of materials and the standard cost per unit. In this case, the actual quantity of materials is 51,300 units and the standard cost per unit is $6.00, so the quantity variance is ($5.80 - $6.00) * 51,300 units = -$10,260.00.