Question

0. T's Inc is a manufacturer of T-shirts. The standard amount of 100% cotton jersey fabric sed to make each T-shirt is 2.3 yards. The standard price per yard of the fabric is $2.75 During the prior month, T's Inc purchased 6,200 yards of the jersey fabric for $13,000. The production department used 5,000 yards to produce 1,800 T-shirts during that month. Compute the material price variance and material quantity variance.

Answer 1

(A)

Material price variance = actual quantity purchased x (standard price - actual price)

= 6200 x ($2.75 - $2.10)

= $4030 Favorable

Where,

Actual price = material cost paid/units of material purchased

= $13000/6200 = $2.10

(B)

Material quantity variance = standard price x (standard quantity - actual quantity used)

= $2.75 x (4140 - 5000)

= $2365 Unfavorable

Where,

Standard quantity = actual output x standard quantity per unit of output

= 1800 x 2.3 = 4140 yards