Question

The standard cost of Product B manufactured by Swifty Company includes 3.50 units of direct materials at $5.40 per unit. During June, 27,300 units of direct materials are purchased at a cost of $5.15 per unit, and 27,300 units of direct materials are used to produce 7.700 units of Product B. - Your answer is partially correct. Compute the total materials variance and the price and quantity variances. Total materials variance $ 4125 Favorable Materials price variance 6825 Favorable Materials quantity variance $ 1890 Unfavorable e Textbook and Media Your answer is partially correct. Compute the total materials variance and the price and quantity variances, assuming the purchase price is $5.50 and the quantity purchased and used is 26,800 units. Total materials variance $ 4125 Unfavorable Materials price variance $ 9380 Unfavorable Is quantity variance $ 772.5 Favorable

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Answer 1

1. Material price variance = (Standard price - Actual price) * Actual quantity

Standard price = $5.4 per unit

Actual price = $5.15 per unit

Actual quantity = 27300 units

Now, putting these values in the above formula, we get,

Material price variance = ($5.4 - $5.15) * 27300

Material price variance = $0.25 * 27300 = $6825

Since the variance is positive, so it is a favorable variance.

Material quantity variance = (Standard quantity for actual units - Actual quantity) * Standard price

Standard price = $5.40 per unit

Standard quantity = 3.50 units

Actual units = 7700 units

Standard quantity for actual units = 7700 * 3.50 = 26950

Actual quantity = 27300

Now, putting these values in the above formula, we get,

Material quantity variance = (26950 - 27300) * $5.40

Material quantity variance = -350 * $5.40 = - $1890

Since the variance is negative, so it is unfavorable variance.

Total material variance = Material price variance + Material quantity variance

Total Material variance = $6825 + (-$1890) = $4935

Since the variance is positive, so it is a favorable variance.

2. When the actual purchase price is $5.50 and actual quantity is 26800 units

Material price variance = (Standard price - Actual price) * Actual quantity

Standard price = $5.4 per unit

Actual price = $5.50 per unit

Actual quantity = 26800 units

Now, putting these values in the above formula, we get,

Material price variance = ($5.4 - $5.50) * 26800

Material price variance = - $0.10 * 26800 = - $2680

Since the variance is negative, so it is unfavorable variance.

Material quantity variance = (Standard quantity for actual units - Actual quantity) * Standard price

Standard price = $5.40 per unit

Standard quantity = 3.50 units

Actual units = 7700 units

Standard quantity for actual units = 7700 * 3.50 = 26950

Actual quantity = 26800

Now, putting these values in the above formula, we get,

Material quantity variance = (26950 - 26800) * $5.40

Material quantity variance = 150 * $5.40 = $810

Since the variance is positive, so it is a favorable variance.

Total material variance = Material price variance + Material quantity variance

Total Material variance = (- $2680) + $810 = - $1870

Since the variance is negative, so it is an unfavorable variance.