The standard cost of Product B by Mateo company includes three units of direct m

Question

The standard cost of Product B by Mateo company includes three units of direct materials at $5.00 per unit. During June, 28,000 units of direct materials are purchased at a cost of $4.70 per unit, and 28,000 units of direct materials are used to produce 9,000 units of Product B.

Compute the total materials variance and the price and quantity variances.

Total materials variance $ = favorable or unfavorable
(Do not understand the formula)
material price variance $ = favorable or unfavorable
(Do not understand the formula)
Material quantity variance$ = favorable or unfavorable
(Do not understand the formula)

Explanation / Answer

Working: Total Material Variance = -$1,240 Unfavorable Material Price Variance = -$5,240 Unfavorable Material Quantity Variance = $4,000 Favorable Working: Material Price Variance = Actual Quantity * (Standard Price - Actual Price) = 26200 * (5 - 5.2) = 26200 * -0.2 = -$5,240 Unfavorable Material Quantity Variance = (Actual Quantity - Standard Quantity) * Standard Price = (26200 - 27000) * 5 = 800 * 5 = $4,000 Favorable Total Material Variance = (Standard Quantity * Standard Price) - (Actual Quantity * Actual Price) = (27000 * 5) - (26200 * 5.2) = 135000 - 136240 = -$1,240 Unfavorable
Total Material Variance = $3,400 Favorable Material Price Variance = $8,400 Favorable Material Quantity Variance = $5,000 Unfavorable Working: Material Price Variance: Material Price Variance = Actual Quantity * (Standard Price - Actual Price) = 28000 * ( 5 - 4.7) = 28000 * 0.3 = $8,400 Favorable Material Quantity Variance: Actual Quantity for producing 9000 units of product "B" = 28000 units Standard Quantity for producing 1 unit of product "B" 3 uints material = 9000 * 3 = 27000 Material Quantity Variance = (Actual Quantity - Standard Quantity) * Standard Price = (28000 - 27000) * 5 = 1000 * 5 = $5,000 Unfavorable Total Material Variance = (Standard Quantity * Standard Price) - (Actual Quantity * Actual Price) = (27000 * 5) - (28000 * 4.7) = 135000 - 131600 = $3,400 Favorable

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