Question

A manufactured product has the following information for June. Standard Actual Direct materials (7 lbs. @ $9 per lb.) 56,500 lbs. @ $9.10 per lb. Direct labor (3 hrs. @ $16 per hr.) 23,700 hrs. @ $16.50 per hr. Overhead (3 hrs. @ $11 per hr.) $ 270,100 Units manufactured 8,000

Compute the direct materials price variance and the direct materials quantity variance. Indicate whether each variance is favorable or unfavorable. AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price

Actual Cost								Standard Cost
			$0	0			$0
				$0
				0

Answer 1

Actual Cost								Standard Cost
AQ	x	AP		AQ	x	SP		SQ	x	SP
56,500	x	9.10		56500	x	9.00		56,000	x	9.00
	514150				508500				504000
			5650				4500
Direct materials price variance				5650	Unfavorable
Direct materials quantity variance				4500	Unfavorable
Total direct materials variance				10150	Unfavorable