Question

Direct Materials Variances Silicone Engine Inc. produces wrist-worn tablet computers. The company uses Thin Film Crystal (TFC) LCD displays for its products. Each tablet uses one display. The company produced 580 tablets during December. However, due to LCD defects, the company actually used 600 LCD displays during December. Each display has a standard cost of $15.00. Six hundred LCD displays were purchased for December production at a cost of $8,550. Determine the price variance, quantity vanance, and total direct materials cost variance for December. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number Price variance Quantity variance Total direct materials cost vanance

Answer 1

Price variance = (Standard price-actual price)actual qty = (15*600-8550) = -450 Favorable

Quantity variance = (Standard qty-actual qty)Standard price = (580-600)*15 = 300 Unfavorable

Total direct material cost variance = (580*15-8550) = -150 Favorable