Question

Direct Materials Variances

The following data relate to the direct materials cost for the production of 2,100 automobile tires:
Actual: 58,400 lbs. at $1.95 $113,880
Standard: 56,600 lbs. at $2.00 $113,200
a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Price variance $
Quantity variance $
Total direct materials cost variance $

Answer 1

Answer and Explanation:

The computation is given below:

We know that

Direct Material Price variance = (Actual Price - Standard Price) × 58400

= ($1.95 - $2) × 58400

= $2,920 Unfavourable

Direct Material Quantity variance = (Standard Quantity - Actual Quantity) ÷ Standard Price

= (56,600 - 58,400) × 2

= $3,600 Unfavourable

and,

Direct Material Cost variance = Standard Cost - Actual Cost

= $113,200 - $113,880

= $680 Unfavourable