Question

Direct Materials Variances The following data relate to the direct materials cost for the production of 2,300 automobile tires: Actual: 48,500 lbs. at $2.05 per Ib. Standard: 47,500 lbs. at $2 per lb. a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct Materials Price Variance Direct Materials Quantity Variance Total Direct Materials Cost Variance b. The direct materials price variance should normally be reported to the If lower amounts of direct materials had been used because of production efficiencies, the variance would be reported to the If the favorable use of raw materials had been caused by the purchase of higher quality raw materials, the variance should be reported to the

Answer 1

a
Direct Materials Price Variance	2425	Unfavorable	=48500*(2.05-2)
Direct Materials Quantity Variance	2000	Unfavorable	=2*(48500-47500)
Total Direct Materials Cost Variance	4425	Unfavorable	=(48500*2.05)-(47500*2)
b
The direct materials price variance should normally be reported to the Purchasing Department. if lower amounts of direct materials had been used because of production efficiencies, the variance would be reported to the Production supervisor. If the favorable use of raw materials had been caused by the purchase of higher-quality raw materials,the variance should be reported to the Purchasing Department