Question

Ceelo Company purchased (at a cost of $22,050) and used 3,500 pounds of materials during May. Ceelo's standard cost of materials per unit produced is based on 2 pounds per unit at a cost $6.50 per pound. Production in May was 1,670 units. (a) Compute the total, price, and quantity variances for materials. (Round answers to 0 decimal places, e.g. 125.) Total Materials Variance ta Materials Price Variance ta Materials Quantity Variance $

Answer 1

Answer- Total Materials variance= $340 U.

Materials price variance= $700 F.

Materials Quantity variance = $1040 U.

Explanation-

1)- Total Materials variance = Standard cost-Actual costs

= (3340 pounds*$6.50 per pound)-$22050

= $21710-$22050

= $340 Unfavorable.

2)-Materials price variance = (Standard price – Actual price) * Actual quantity used

= ($6.50 per pound – ($22050/3500 pounds)*3500 pounds

= $700 Favorable

3)-Material Quantity variance = (Standard Quantity- Actual Quantity)*Standard price

=(3340 pounds –3500 pounds)*$6.50 per pound

= $1040 Unfavorable

Where:-

Standard Quantity = No. of pounds per unit*Actual output

= 2 pounds per unit *1670 units

= 3340 pounds