Question

Exercise 11-5 (Video) The standard cost of Product B manufactured by Pharrell Company includes 3.0 units of direct materials at $6.80 per unit. During June, 27,500 units of direct materials are purchased at a cost of $6.60 per unit, and 27,500 units of direct materials are used to produce 9,100 units of Product B. (a) Compute the total materials variance and the price and quantity variances. Total materials variance Materials price variance Materials quantity variance (b) Compute the total materials variance and the price and quantity variances, assuming the purchase price is $6.90 and the quantity purchased and used is 26,500 units. Total materials variance Materials price variance Materials quantity variance Click if you would like to Show Work for this question: Open Show Work

Answer 1

Ans:

a)                                                                                           

Standard quantity allowed (9100*3): 27300 units                                       

Standard price per unit: $ 6.80 per unit                                          

Actual Quantity : 27500 units                                                           

Actual Price: $ 6.60 per unit                                                             

                                                                                               

Total material variance= Standard qty*Std price - Actual Qty*Actual price

                                27300*6.80 - 27500 *6.60 = $ 4140 Fav       

                                                                                               

Material price variance: Actual Qty (Standard price-Actual price)            

                                27500 (6.80 -6.60 ) =   $5500 Fav   

                                                                                               

Material Quantity Variance: Standard price(Standard quantity-Actual Quantity)

                                6.80 (27300-27500 ) = $ 1360 Unfav             

                                                                                               

b)

Ans:                                                                                       

Standard quantity allowed (9100*3): 27300 units                                       

Standard price per unit: $ 6.80 per unit                                          

Actual Quantity : 26500 units                                                           

Actual Price: $ 6.90 per unit                                                             

                                                                                               

Total material variance: Standard quantity * Standard price - Actual Qty*Actual price

                                27300*6.80 - 26500 *6.90 = $ 2790 Fav       

                                                                                               

Material price variance: Actual Qty (Standard price-Actual price)            

                                26500 (6.80 -6.90 ) =   $2650 unFav              

                                                                                               

Material Quantity Variance: Standard price(Standard quantity-Actual Quantity)

                                6.80 (27300-26500 ) = $ 5440 fav