Question

Direct Materials Variances De Soto Inc. produces tablet computers. The company uses Thin Film Crystal (TFC) LCD displays for its products. Each tablet uses one display. The company produced 770 tablets during July. However, due to LCD defects, the company actually used 800 LCD displays during July. Each display has a standard cost of $12.50. Eight hundred LCD displays were purchased for July production at a cost of $9,400. Determine the price variance, quantity variance, and total direct materials cost variance for July. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Price variance$fill in the blank 1 Quantity variance$fill in the blank 3 Total direct materials cost variance$fill in the blank 5

Answer 1

Please see below

Step-by-step explanation:

1. In order to calculate the Direct material price variance , we would have to use the formula below ;

Direct material price variance

= (Standard price - Actual price) × Actual quantity purchased

= ($12.5 - Actual cost) × 800

= $12.5 × 800 - $9,400

= $10,000 - $9,400

= $600 favourable

2. In order to calculate the direct material quantity variance, we would make use of the formulae below

Direct material quantity variance

= (Standard quantity - Actual quantity) × Standard price

= (770 - 800) × $12.5

= $375 unfavorable

3. The total direct material cost variance for July

= Direct material price variance + Direct material quantity variance

= $600 - $375

= $225 favourable