Exercise E11-7 Calculating Material Variances WRX uses a standard costing system

Question

Exercise   E11-7 Calculating Material Variances WRX   uses a standard costing system. For production of a fuel cell, standards call   for 5 model RN-3 valves   per cell costing $2,300 each. During 2015, the   company purchased 220 valves for $587,500 The company used 208 valves in the   production of 60 fuel cells ( 6 valves   were ruined through installation error). Required: Calculate material price and   quantity variances for the model RN-3 valves. Material Price   Variance = =     ( Amount - Amount )          * Number = Formula Fav/Unf Material Quantity   Variance = =     ( Number - Number )          * Amount = Formula Fav/Unf Exercise   E11-7 Calculating Material Variances WRX   uses a standard costing system. For production of a fuel cell, standards call   for 5 model RN-3 valves   per cell costing $2,300 each. During 2015, the   company purchased 220 valves for $587,500 The company used 208 valves in the   production of 60 fuel cells ( 6 valves   were ruined through installation error). Required: Calculate material price and   quantity variances for the model RN-3 valves. Material Price   Variance = =     ( Amount - Amount )          * Number = Formula Fav/Unf Material Quantity   Variance = =     ( Number - Number )          * Amount = Formula Fav/Unf

Explanation / Answer

Calculate material price and quantity variances for the model RN-3 valves. Material Price Variance = = ( 2300 - 2670.45 ) * 220 = 81500 Unf Material Quantity Variance = = ( 300 - 208 ) * 2300 = 211600 Fav

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