In all of the exercises involving variances, use “F” and “U” to designate favorable and unfavorable variances, respectively.
Computing materials variances
D-List Calendar Co. specializes in manufacturing calendars that depict obscure comedians. The company uses a standard cost system to control its costs. During one month of operations, the direct materials costs and the quantities of paper used showed the following:
Actual purchase price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.175 per page
Standard quantity allowed for production . . . . . . . . . . . . . . . . . . . . . . 170,000 pages
Actual quantity purchased during month. . . . . . . . . . . . . . . . . . . . . . . 200,000 pages
Actual quantity used during month. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185,000 pages
Standard price per page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.17 per page
Calculate the following variances:
1. Total cost of purchases for the month
2. Materials price variance
3. Materials quantity variance
4. Net materials variance
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