Question

The following standards have been established for a raw material used to make product O84: Standard quantity of the material per unit of output 8.6 meters Standard price of the material $ 19.80 per meter The following data pertain to a recent month's operations: Actual material purchased 4,900 meters Actual cost of material purchased $ 101,430 Actual material used in production 4,600 meters Actual output 650 units of product O84 The direct materials purchases variance is computed when the materials are purchased. Required:

Answer 1

Results are below.

Step-by-step explanation:

To calculate the direct material price and quantity variance, we need to use the following formulas:

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

Direct material price variance= (19.8 - 20.7)*4,900

Direct material price variance= $4,410 unfavorable

Actual price= 101,430/4,900= $20.7

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

Direct material quantity variance= (8.6*650 - 4,600)*19.8

Direct material quantity variance= $19,602 favorable