Question

Ruby Company produces a chair that requires 7 yards of material per unit. The standard price of one yard of material is $14.40. During the month, 6,500 chairs were manufactured, using 44,600 yards at a cost of $15.12 per yard. Enter favorable variances as negative numbers. (a) Determine the price variance. $fill in the blank 1 (b) Determine the quantity variance. $fill in the blank 3 (c) Determine the cost variance. $fill in the blank 5

Answer 1

See below

Step-by-step explanation:

a. Price variance

= (Actual price - Standard price) × Actual material

= ($15.12 - $14.40) × 44,600

= $0.72 × 44,600

= $32,112 Unfavourable

b. Quantity variance

= (Actual quantity - Standard quantity) × Standard price

= [44,600 - (6,500 × 7) ] × $14.40

= (44,600 - 45,500) × $14.40

= -900 × $14.40

= $12,960 Favourable

C. Cost variance

= Actual cost - Standard cost

= (44,600 × $15.12) - (7 × 6,500 × $14.40)

= $674,352 - $655,200

= $19,152Unfavourable