Question

STANDARD COST SYSTEMS

Maple Company's flexible budget, based upon the number of equivalent units produced, called for the use of 5,000 square yards of fabric at a standard cost of $2.45 per square yard. The Production Department actually used 5,200 square yards costing $2.35 per square yard during June.

* Show calculations

1)Compute the amount of favorable/unfavorable materials price variance for Maple Company for June.

2)Compute the amount of favorable/unfavorable materials quantity variance for Maple Company for June.

3)Write the journal entries to record the cost of direct materials used in June.

4)With respect to materials costs, for what should the supervisor of the Production Department be held responsible?

Answer 1

1)	Direct Material Price Varaince = Actual Quantity Used * (Standard Price per unit - Actual Price Per Unit
		=5200 yards* ($2.45-2.35)
		=$520 (favorable)
2)	Direct Material Quantity Variance = Standard Price Per Unit * (Standard Quantity For Actual Units Produced - Actual Quantity)
		=$2.45 per yard * (5000 yards-5200 yards)
		=$490 (unfavorable)
3)
	Journal Entry
				Debit	Credit
	Finished goods			$         12,220
	Direct Material Variance (net)			$                 30
	Direct Material Inventory				$         12,250
		(to record direct material used)
4)	With respect to materials costs, the supervisor of the
	Production Department should be held responsible for
	An unfavorable cost variance of $490