Question

Direct Materials Variances Silicone Engine Inc. produces wrist-worn tablet computers. The company uses Thin Film Crystal (TFC) LCD displays for its products. Each tablet uses one display. The company produced 580 tablets during December. However, due to LCD defects, the company actually used 600 LCD displays during December. Each display has a standard cost of $15.00. Six hundred LCD displays were purchased for December production at a cost of $8,550. Determine the price variance, quantity variance, and total direct materials cost variance for December. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Price variance $ Quantity variance $ Total direct materials cost variance $

Answer 1

The price variance is -$450 favorable

The quantity variance is $300 unfavorable

The Total direct materials cost variance is -$150 favorable

Step-by-step explanation:

According to given data we have the following:

standard price=$15

Actual price=$8,550/600=$14.25

standard quantity=580

Actual quantity=600

To calculate the price variance, quantity variance, and total direct materials cost variance for December we would have to make the following calculations:

price variance=(Actual price-standard price)*Actual quantity

price variance=($14.25-$15)*600

price variance=-$450 favourable

quantity variance=(Actual quantity-standard quantity)*standard price

quantity variance=(600-580)*$15

quantity variance=$300 unfavorable

total direct materials cost variance=materials price variance+material quantity variance

total direct materials cost variance=-$450+$300

total direct materials cost variance=-$150