Question

Direct Materials Variances Bellingham Company produces a product that requires 12 standard pounds per unit. The standard price is $7 per pound. If 2,700 units used 31,100 pounds, which were purchased at $7.28 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. a. Direct materials price variance $fill in the blank 1 b. Direct materials quantity variance $fill in the blank 3 c. Direct materials cost variance $fill in the blank 5

Answer 1

Answer and Explanation:

The computation is shown below:

a.

Direct material price variance is

= ($7 - $7.28) × 31,100

= $8,708 Unfavourable

b.

Direct material quantity variance is

= (2,700 × 12 - 31,100) × $7

= $9,100 Favourable

c.

Direct material cost variance is

= $9,100 - $8708

= $392 favorable

In this way, it should be calculated