Question

Ruby Company produces a chair that requires 4 yards of material per unit. The standard price of one yard of material is $12.80. During the month, 5,200 chairs were manufactured, using 21,000 yards at a cost of $12.16 per yard.

Determine the following: Enter favorable variances as negative numbers.

a.	Price Variance	$
b.	Quantity Variance	$
c.	Cost Variance	$

The standard costs and actual costs for direct materials for the manufacture of 2,020 actual units of product are as follows:

Standard Costs
Direct materials	2,020 kilograms @$8.70
Actual Costs
Direct materials	2,100 kilograms @ $8.40

The direct materials quantity variance is

a.$557 favorable

b.$696 favorable

c.$696 unfavorable

d.$557 unfavorable

Answer 1

Answer 1 Calculation of Variances a Price Variance = ($12.80 per yard - $12.16 per yard) x 5,200 = $3,328 Unfavorable variance b Quantity Variance = [21,000 yards - (5,200 x 4)] x $12.16 = $2,432 Favorable variance c Total Cost Variance = $3,328 Unfavorable variance + $2,432 Favorable variance = $896 Unfavorable variance 2 The Correct Option is (c) $696 unfavorable Explanations Calculation of direct materials quantity variance Direct Materials Quantity Variance = (2,020 kgm - 2,100 kgm) x $8.70 per kilogram = $696 unfavorable