Question

The standard cost of Product B manufactured by Pharrell Company includes 2.7 units of direct materials at $6.20 per unit. During June, 26,700 units of direct materials are purchased at a cost of $6.05 per unit, and 26,700 units of direct materials are used to produce 9,800 units of Product B.

(a)

Compute the total materials variance and the price and quantity variances.

Total materials variance		$enter a dollar amount		select an option Neither favorable nor unfavorableUnfavorableFavorable
Materials price variance		$enter a dollar amount		select an option FavorableUnfavorableNeither favorable nor unfavorable
Materials quantity variance		$enter a dollar amount		select an option UnfavorableFavorableNeither favorable nor unfavorable

(b)

Compute the total materials variance and the price and quantity variances, assuming the purchase price is $6.25 and the quantity purchased and used is 26,500 units.

Total materials variance		$enter a dollar amount		select an option UnfavorableNeither favorable nor unfavorableFavorable
Materials price variance		$enter a dollar amount		select an option Neither favorable nor unfavorableFavorableUnfavorable
Materials quantity variance		$enter a dollar amount		select an option FavorableNeither favorable nor unfavorableUnfavorable

Answer 1

Data Standard Price SP 6.20 Per unit Standard quantity Per unit 2.7 Units Standard Quantity for Actual Output (9800*2.7) SQ 26460 Pounds Actual Output 9800 Units Actual Quanity Used AQ 26700 Units Actual Price of Material (12593/2376) AP 6.05 Per unit Answers Total Material Cost Variance 2517 Favourable Mateial Price Variance (SP-AP)* AQ purchased = 6.20-6.05)*26700 4005 Favourable Matrial Quanity Varaince (SQ-AQ) *SP= (26700-26460)*6.20 1488 Unfavourable Assuming The Purchase price $6.25 and the for 26,500 Units Total Material Cost Variance 1573 Unfavourable Mateial Price Variance (SP-AP)* AQ purchased = (6.20-6.25)*26500 1325 Unfavorable Matrial Quanity Varaince (SQ-AQ)*SP= (26500-26460)*6.20 248 Unfavorable