Question

The standards for product V28 call for 8.3 pounds of a raw material that costs $19.00 per pound. Last month, 2,200 pounds of the raw material were purchased for $41,360. The actual output of the month was 240 units of product V28. A total of 2,100 pounds of the raw material were used to produce this output.

The direct materials purchases variance is computed when the materials are purchased.
Required:
a. What is the materials price variance for the month?
b. What is the materials quantity variance for the month?

Answer 1

Results are below.

Step-by-step explanation:

To calculate the direct material price variance, we need to use the following formula:

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (19 - 18.8)*2,200

Direct material price variance= $440 favorable

Actual price= 41,360 / 2,200= $18.8

Now, we can determine the direct material quantity variance:

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Direct material quantity variance= (8.3*240 - 2,100)*19

Direct material quantity variance= $2,052 unfavorable