Question

Direct Materials Variances Bellingham Company produces a product that requires nine standard pounds per unit. The standard price is $8.5 per pound. If 2,100 units used 18,100 pounds, which were purchased at $8.93 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance

Answer 1

The correct answer is:

(a) -7783

(b) 6800

(c) -983

Step-by-step explanation:

According to the given values in the question:

(a)

The price variance will be:

=
`(8.5-8.93)* 18100`

=
`-0.43* 18100`

=
`-7783` (Favorable)

(b)

The quantity variance will be:

=
`(2100* 9-18100)* 8.5`

=
`(18900-18100)* 8.5`

=
`800* 8.5`

=
`6800` (Unfavorable)

(c)

The cost variance will be:

=
`(2100* 9* 8.5)-(18100* 8.93)`

=
`(160650)-(161633)`

=
`-983` (Favorable)