Direct materials variances
Bellingham Company produces a product that requires 2.3 standard pounds per unit. The standard price is $3,40 per pound. 15,900 units used 36,400 pounds, which were purchased at $3.55 per
pound.
What is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance? Round your answers to the nearest dollar. Enter a favorable variance as a negative number using a
minus sign and an unfavorable variance as a positive number.
a. Direct materials price variance
5,460 Unfavorable
b. Direct materials quantity variance
-4,810 X Favorable
c. Direct materials cost variance
Unfavorable
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Unfavorable variances can be thought of as increasing costs (a debit). Favorable variances can be thought of as decreasing costs (a credit)
Cost variance is the difference between the actual and standard total cost