Question

Total Materials Variance Krumple Inc. produces aluminum cans. Production of 10-ounce cans has a standard unit quantity of 4.6 ounces of aluminum per can. During the month of April, 250,000 cans were produced using 1,100,000 ounces of aluminum. The actual cost of aluminum was $0.15 per ounce and the standard price was $0.02 per ounce. There are no beginning or ending inventories of aluminum. Required: Calculate the total variance for aluminum for the month of April. Enter amount as a positive number and select Favorable or Unfavorable.

Answer 1

material price variance

(actual price - standard price) * actual quantity

actual price per ounce = 0.15

standard price per ounce = 0.02

actual material quantity = 1,100,000 ounce

( 0.15 - 0.02 ) * 1,100,000 = 143,000

material price variance = 143,000 unfavorable

it's unfavorable because the actual price greater than standard price so it is unfavorable.

.

material quantity variance

( actual quantity - standard quantity ) * standard price

actual quantity = 1,100,000 ounce

standard quantity = 1,150,000 (4.6 ounce per unit * 250,000)

standard price = 0.02 per ounce

( 1,150,000 - 1,100,000 ) * 0.02 = 1,000 favorable

the actual quantity is less than of standard quantity so its favorable .

0)

total variance = material price variance ( unfavorable ) - quantity variance (favorable )

143,000 - 1000 = 142,000 it is unfavorable

the total variance is unfavorable because the unfavorable amount is grater than the favorable amount so it is unfavorable.