Question

Hiroole Jewelry produced 1,530 rings during March. The standard cost of each ounce of gold used in a ring is $1,060 per ounce. The standard quantity of material for each ring is a 0.5 ounce of gold per ring. The cost of gold purchased and used in March was $724,500 at $1,050 per ounce. Determine the material price variance and the material quantity variance for March. Indicate whether each variance is favorable or unfavorable. (Enter all variances as a positive number.)

Material price variance		$		FavorableUnfavorableNeither Unfavorable nor Favorable
Material quantity variance		$		FavorableNeither Unfavorable nor FavorableUnfavorable

Answer 1

Answer:- Direct Material price variance= $6900 F.

Direct Material Quantity variance = $79500 F.

Explanation-

1)-Material price variance = (Standard price – Actual price) * Actual quantity purchase

= {$1060 per ounce – $1050 per ounce}*690 ounce

= $6900 Favorable

2)-Material Quantity variance = (Standard Quantity- Actual Quantity)*Standard price

                                              =(765 ounce – 690 ounce)*$1060 per ounce

                                             = $79500 Favorable

Where:-

Standard Quantity = No. of yards per unit*Actual output

= 0.50 ounce per unit *1530 units

= 765 ounce