Question

Required Information (The following information applies to the questions displayed below.) Hart Company made 3.220 bookshelves using 22,220 board feet of wood costing $293,304. The company's direct materials standards for one bookshelf are 8 board feet of wood at $13.10 per board foot. AQ = Actual Quantity SQ = Standard Quan AP = Actual Price SP - Standard Price (1) Compute the direct materials price and quantity variances and classify each as favorable or unfavorable. (2) Hart applies management by exception by investigating direct materials variances of more than 5% of actual direct materials costs Which direct materials variances will Hart investigate further? Complete this question by entering your answers in the tabs below.

Answer 1

Actual Cost				Standard Cost
Quantity	Price	Cost		Quantity	Price	Cost
22,220	13.20	293,304		25,760	13.10	337,456
Direct material price Variance = (Standard Price - Actual Price)*Actual Quantity
=(13.10-13.20)*22,220 = $2,222 U
Direct Material Quantity Variance = (Standard Quantity - Actual Quantity)*Standard Price
=(25,760-22,220)*13.10 = $46,374 F
Total variance = $44,152 Excluded = 5% = $293304*5% = $14,665.2 Investigated further = $29,486.8