The standard cost of Product B manufactured by Novak Company includes 2.60 units

Question

The standard cost of Product B manufactured by Novak Company includes 2.60 units of direct materials at $7.00 per unit. During June, 27,300 units of direct materials are purchased at a cost of $6.75 per unit, and 27,300 units of direct materials are used to produce 10,400 units of Product B.

LINK TO TEXT

The standard cost of Product B manufactured by Novak Company includes 2.60 units of direct materials at $7.00 per unit. During June, 27,300 units of direct materials are purchased at a cost of $6.75 per unit, and 27,300 units of direct materials are used to produce 10,400 units of Product B.

Explanation / Answer

Part 1 Actual Flexible Budgeted AQ AP AQ SP SQ* SP 27300 6.75 27300 7 27040 7 184275 191100 189280 A B C Direct material price variance = 6825 Favorable (B-A) Direct material quantity variance = 1820 Unfavorble (B -C) Total Material Variance = 5005 Favorable (C - A) *10400 x 2.60 = 27040 Part 2 Actual Flexible Budgeted AQ AP AQ SP SQ* SP 26700 7.05 26700 7 27040 7 188235 186900 189280 A B C Direct material price variance = 1335 Unfavorable (A-B) Direct material quantity variance = 2380 Favorable (C-B) Total Material Variance = 1045 Favorable (C - A) *10400 x 2.60 = 27040

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