Question

Simba Company’s standard materials cost per unit of output is $9.00 (2.00 pounds x $4.50). During July, the company purchases and uses 3,080 pounds of materials costing $16,632 in making 1,400 units of finished product. Compute the total, price, and quantity materials variances. (Round per unit values to 2 decimal places, e.g. 52.75 and final answers to 0 decimal places, e.g. 52.)

Total materials variance

Materials price variance

Materials quantity variance

Answer 1

Materials Price Variance =	Actual Quantity x (Actual Price - Standard Price)
=	3,080 x ($5.40 - $4.50)
=	$2,772	Unfavorable
Materials Quantity Variance =	Standard Price x (Actual Quantity used - Standard Quantity allowed)
=	$4.50 x (3,080 - 2,800)
=	$1,260	Unfavorable
Total Materials Variance =	$2,772 + $1,260
=	$4,032	Favorable
Working
Actual Price = $16,632/3,080 = $5.40
Standard Quantity allowed = 1,400 x 2.00 Pound = 2,800