Question

Perfect Pet Collar Company makes custom leather pet collars. The company expects each collar to require 1.55 feet of leather and predicts leather will cost $2.60 per foot. Suppose Perfect Pet made 50 collars during February. For these 50 collars, the company actually averaged 1.85 feet of leather per collar and paid $2.10 per foot. Required: 1. Calculate the standard direct materials cost per unit. (Round your answer to 2 decimal places.) Standard Direct Materials per Collar 2. Without performing any calculations, determine whether the direct materials price variance will be favorable or unfavorable. Direct Material Price Variance 3. Without performing any calculations, determine whether the direct materials quantity variance will be favorable or unfavorable. Direct Material Quantity Variance 6. Calculate the direct materials price and quantity variances. (Round your intermediate calculations and final answers to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Direct Material Price Variance Direct Material Quantity Variance

Answer 1

Answer

• Requirement 1

Standard direct materials = $ 201.50 per Collar

	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct Material	( 1.55 feet x 50 units)=77.5 feet	$                   2.60	$             201.50

• Requirement 2: Direct material Price Variance = FAVOURABLE, as actual price is LESS than standard price.
• Requirement 3: Direct Material Quantity Variance = UNFAVOURABLE, as actual qty used is MORE than Standard qty.
• Requirement 6

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                                2.60	-	$                       2.10	)	x	92.5
	46.25
	Variance		$                    46.25			Favourable-F
Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	77.5	-	92.5	)	x	$                           2.60
	-39
	Variance		$                    39.00			Unfavourable-U