Question

Gamma Company budgeted to use 2 pounds of materials per unit at a budgeted cost of $100 per pound. Budgeted production and sales volume was 5,000 units. Actual production and sales volume was 4,000 units, and the company used a total of 8,080 pounds of materials at an actual cost of $102 per pound. The input price and input quantity variances are: Group of answer choices Input Price - Favorable; Input Quantity - Favorable Input Price - Favorable; Input Quantity - Unfavorable Input Price - Unfavorable; Input Quantity - Favorable Input Price - Unfavorable; Input Quantity - Unfavorable Not enough information

Answer 1

Gamma Company

The input price and input quantity variances are:

Input Price - Unfavorable; Input Quantity - Unfavorable

Step-by-step explanation:

a) Data and Calculations:

Budgeted pounds of materials per unit = 2

Budgeted cost per pound = $100

Budgeted material price per unit = $200

Budgeted production and sales volume = 5,000 units

Budgeted materials = 10,000 pounds

Actual production and sales volume = 4,000 units

Standard quantity of materials for actual production = 8,000 (4,000 * 2)

Actual quantity of materials used = 8,080

Quantity variance = 80 (8,080 - 8,000) Unfavorable

Total budgeted cost = $800,000 (8,000 * $100)

Total actual cost = $824,160 (8,080 * $102)

Price variance = $2 ($102 - $100) Unfavorable