Question

Ceelo Company purchased (at a cost of $9,630) and used 1,800 pounds of materials during May. Ceelo’s standard cost of materials per unit produced is based on 3 pounds per unit at a cost $5.50 per pound. Production in May was 510 units. (a) Compute the total, price, and quantity variances for materials. Total Materials Variance $ Materials Price Variance $ Materials Quantity Variance $

Answer 1

Answer and Explanation:

The computation is shown below:

Material price variance

= (Actual quantity × Actual price) - (Actual quantity × Standard price)

= ($9,630) - (1,800 × $5.50)

= $270 favorable

Material quantity variance

= (Actual quantity × Standard price) - (Standard quantity × Standard price)

= (1,800 × $5.50) - [(510 × 3) × $5.5]

= $9,900 - $8,415

= $1,485 unfavorable

Total material variance

= Material price variance + material quantity variance

= $270 unfavorable + $1,485 unfavorable

= $1,215 unfavorable