Question

Ceelo Company purchased (at a cost of $12,510) and used 1,800 pounds of materials during May. Ceelo’s standard cost of materials per unit produced is based on 1 pounds per unit at a cost $7.00 per pound. Production in May was 1,720 units.

(a)

Compute the total, price, and quantity variances for materials. (Round answers to 0 decimal places, e.g. 125.)

Total Materials Variance		$		UnfavorableFavorableNeither favorable nor unfavorable
Materials Price Variance		$		UnfavorableFavorableNeither favorable nor unfavorable
Materials Quantity Variance		$		UnfavorableFavorableNeither favorable nor unfavorable

Answer 1

Solution

Total Material Variance	$               470.00	Unfavourable-U
Material Price Variance	$                 90.00	Favourable-F
Material quantity variance	$               560.00	Unfavourable-U

Working

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                    7.00	-	$                     6.95	)	x	1800
	90
	Variance		$                   90.00			Favourable-F
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	1720	-	1800	)	x	$              7.00
	-560
	Variance		$                 560.00			Unfavourable-U
Material Spending Variance
(	Standard Cost	-	Actual Cost	)
(	$         12,040.00	-	$           12,510.00	)
	-470
	Variance		$                 470.00			Unfavourable-U

.

Standard DATA for		1720	Units
	Quantity (SQ)	Rate (SR)	Standard Cost
Direct Material	1720	$       7.00	$          12,040.00

.

Standard DATA for		1720	Units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct Material	( 1 pound x 1720 Units)=1720 pound	$                   7.00	$            12,040.00