Question

devoto incorporated has provided the following data concerning one of the products in its standard cost system. inputs standard quantity or hours per unit of output standard price or rate direct materials 6.6 grams $ 7.70 per gram the company has reported the following actual results for the product for june: actual output 9,200 units raw materials purchased 64,500 grams actual cost of raw materials purchased $ 548,250 raw materials used in production 60,710 grams the raw materials price variance for the month is closest to:

Answer 1

The raw materials price variance for the month is $6,402.

Step-by-step explanation:

The raw materials price variance for the month is calculated by finding the difference between the actual cost of raw materials purchased and the standard cost of raw materials for the actual output.

The standard cost of raw materials for the actual output can be found by multiplying the standard quantity or hours per unit of output by the standard price or rate for direct materials. In this case, the standard quantity is 6.6 grams and the standard price is $7.70 per gram.

The actual cost of raw materials purchased is $548,250 and the actual output is 9,200 units. Therefore, the standard cost of raw materials for the actual output is 6.6 grams * $7.70 per gram * 9,200 units = $541,848.

The raw materials price variance is calculated as the actual cost of raw materials purchased minus the standard cost of raw materials for the actual output: $548,250 - $541,848 = $6,402.

Answer 2

The raw materials price variance is calculated by comparing the actual cost to the standard cost of the materials. It is found to be $51,750 for the month.

Step-by-step explanation:

To calculate the raw materials price variance, we compare the standard cost to the actual cost of the materials purchased. The formula is: (Actual Quantity x Actual Price) - (Actual Quantity x Standard Price). The standard price per gram is given as $7.70, and the actual cost of raw materials purchased is $548,250 for 64,500 grams. This gives us an actual price per gram of $548,250 / 64,500 grams = $8.50 per gram. Thus, the variance calculation is (64,500 grams x $8.50) - (64,500 grams x $7.70) which equals $51,750.