Question

Computing materials variances:

D-List Calendar Company specializes in manufacturing calendars that depict obscure comedians. The company uses a standard cost system to control its costs. During one month of operations, the direct materials costs and the quantities of paper used showed the following:
Actual purchase price
$0175 per page
Standard quantity allowed for production
170,000 pages
Actual quantity purchased during month
200,000 pages
Actual quantity used during month
185,000 pages
Standard price per page
$0.17 per page
1. Total cost of purchases for the month
2. Materials price variance
3. Materials quantity variance
4. Net materials variance

Answer 1

1. Total cost of purchases for the month

• = actual purchases x actual price = 200,000 pages x $0.175 per page = $35,000

2. Materials price variance

• = (actual unit cost - standard unit cost) x actual quantity used = ($0.175 - $0.17) x 185,000 = $925 unfavorable

3. Materials quantity variance

= (actual quantity used - standard quantity allowed) x standard price = (185,000 - 170,000) x $0.17 = $2,550 unfavorable

4. Net materials variance

• = materials price variance + materials quantity variance = $925 + $2,550 = $3,475 unfavorable

Step-by-step explanation:

Actual purchase price $0.175 per page

Standard quantity allowed for production 170,000 pages

Actual quantity purchased during month 200,000 pages

Actual quantity used during month 185,000 pages

Standard price per page $0.17 per page