Question

heridan Company has a materials price standard of $2.00 per pound. 4300 pounds of materials were purchased at $2.20 a pound. The actual quantity of materials used was 4300 pounds, although the standard quantity allowed for the output was 4000 pounds. Sheridan Company's total materials variance is

Answer 1

Answer: $1,460 Unfavourable

Step-by-step explanation:

Variance is calculated on various accounts in a company. The aim of this is to see if the company is spending more or less than it's budgeted figures for the activities in question. When a Variance is listed as Unfavourable it means that the Actual figures were more than the Budgeted figures. When it is listed as Favourable, that means that the figures are less than the Budgeted figures.

For Total Materials Variance, the following formula can be used,

Total Materials Variance = Actual Quantity*Actual Rate - Standard Quantity*Standard Rate

Actual Quantity = 4,300

Actual Price = $2.20

Standard Quantity = 4,000

Standard Price = $2.00

Total Materials Variance = (4,300 * 2.2) - (4,000 * 2)

= 9,460 - 8,000

= $1,460

Because the Actual Cost was more than the Standard/ Budgeted cost, this variance is Unfavourable.