Question

Duval inc budgets direct materials at $1/liter and requires 4 liters per unit of finished product. April’s activities show usage of 832 liters to complete 196 units at a cost of $798.72. Calculate the direct materials price and quantity variances and indicate favorable or unfavorable results.

Answer 1

Instructions are below.

Step-by-step explanation:

Giving the following information:

Duval inc budgets direct materials at $1/liter and requires 4 liters per unit of the finished product.

April’s activities show usage of 832 liters to complete 196 units at a cost of $798.72.

To calculate the direct material price and quantity variance, we need to use the following formulas:

Direct material price variance= (standard price - actual price)*actual quantity

Actual price= 798.72/832= $0.96

Direct material price variance= (1 - 0.96)*832

Direct material price variance= $33.28 favorable

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Standard quantity= 4*196= 784

Direct material quantity variance= (784 - 832)*1

Direct material quantity variance= $48 unfavorable