Question

Tercer reports the following for one of its products. Direct materials standard (4 lbs. @ $3 per lb.) Actual direct materials used (AQ) Actual finished units produced Actual cost of direct materials used $ 12 per finished unit 350,000 lbs. 70,000 units $910,000 AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price Compute the direct materials price and quantity variances and classify each as favorable or unfavorable Actual Cost Standard Cost $ 0 $ 0 $ 0 01

Answer 1

Note: As per HOMEWORKLIB POLICY, only one question is allowed to answer at a time, so here first question is being answered :

(A)

Material price variance = actual quantity x (standard price - actual price)

= 350000 x ($3 - $2.6)

= $140000 Favorable

Where,

Actual price = material cost paid/units of material purchased

= $910000/350000 = $2.6

(B)

Material quantity variance = standard price x (standard quantity - actual quantity)

= $3 x (280000 - 350000)

= $210000 Unfavorable

Where,

Standard quantity = actual output x standard quantity per unit of output

= 70000 x 4 = 280000 lbs

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(A)

Labor rate variance = actual hours x (standard rate - actual rate)

= 58000 x ($14 - $15)

= $58000 Unfavorable

(B)

Labor efficiency variance = standard rate x (standard hours - actual hours)

= $14 x (59200 - 58000)

= $16800 Favorable