Question

Simba Company’s standard materials cost per unit of output is $10.12 (2.30 pounds x $4.40). During July, the company purchases and uses 2,898 pounds of materials costing $15,359 in making 1,400 units of finished product. Compute the total, price, and quantity materials variances. (Round per unit values to 2 decimal places, e.g. 52.75 and final answers to 0 decimal places, e.g. 52.)

Total materials variance

Materials price variance

Materials quantity variance

Answer 1

Budgeted Data
Material used per output = 2.3 pounds
Price per pound of material = $4.40
Actual Data
Material used per output =			2898 pounds/1400 units =			2.07 pounds
Price per pound of material =			$15359/2898 pounds =			$5.30
	Total Material Variance =			(Budgeted material used * budgeted price * 1400 UNITS) - (Actual material used *actual price * 1400 UNITS)
			=	(2.3*4.4*1400)-(2.07*5.30*1400)
			=	14168-15359
			=	$1,191 (Unfavourable)
	Material price variance =			(budgeted price - Actual Price) * Budgeted material used per unit of output * 1400 units
			=	(4.40-5.30)*2.3*1400
			=	$2,898 (Unfavourable)
	Material quantity variance =			(budgeted quantity per unit - Actual quantity per unit) * Actual price * 1400 units
			=	(2.3 -2.07) * 5.30 * 1400
			=	$1,707 (Favourable)
	Proof:
	Total Material Variance =			Material price variance + Material quantity variance
	($1,191)			($2,898)	+	$1,707
				($1,191)
	Hence proved!

Answer 2

Materials Price Variance =	Actual Quantity x (Actual Price - Standard Price)
=	2898 x ($5.30 - $4.40)
=	$2,608 U	Unfavorable
Materials Quantity Variance =	Standard Price x (Actual Quantity used - Standard Quantity allowed)
=	$4.40 x (2898 - 3220*)
=	$1,417 F	Unfavorable
Total Materials Variance =	$2,608U + $1,417F
=	$ 1,191 U

*1400x2.30=3220