Question

Acoma, Inc., has determined a standard direct materials cost per unit of $6.60 (2 feet < $3.30 per foot). Last month, Acoma purchased and used 4,410 feet of direct materials for which it paid $14,112. The company produced and sold 2,090 units during the month. Calculate the direct materials price, quantity, and spending variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Round your intermediate calculations to 2 decimal places.) Direct Materials Price Variance Direct Materials Quantity Variance Direct Materials Spending Variance

Answer 1

Answer:

Direct materials price variance	$441	Favorable
Direct materials quantity variance	$759	Unfavorable
Direct materials spending variance	$318	Unfavorable

Calculations:

• Standard quantity (SQ) = Actual units x Standard direct materials per unit = 2,090 units x 2 feet = 4,180 feet of direct materials
• Actual quantiry (AQ) = 4,410 feet of direct materials
• Standard price per unit (SP) = $3.30
• Actual price per unit (AP) = $14,112 ÷ 4,410 = $3.20

i.Direct materials price variance = AQ(AP-SP) = 4,410 ($3.20-$3.30)

= 4,410 X $0.10

= -$441 OR $441 Favorable

ii.Direct materials quantity variance = SP(AQ-SQ)

= $3.30 (4,410-4,180)

= $3.30 x 230

= $759 Unfavorable

iii.Direct materials spending variance = (AQ X AP) - (SQ X SP)

= ($3.20 x 4,410) - ($3.30 x 4,180)

= $14,112 - $13,794

= $318 Unfavorable