The following materials standards have been established for a particular product
ID: 2418231 • Letter: T
Question
The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month The direct materials purchases variance is computed when the materials are purchased. What is the materials price variance for the month'? (Input the amount as a positive value. Leave no cells blank - be certain to enter "O" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)Explanation / Answer
Direct material price variance =PQ*(AP-SP)
PQ=Quantity purchased
AP=Actual price
SP=standard price
AP=27960/2400=11.65
=2400*(11.65-14)=$-5640 it is unfavourable
b)Material quantity purchase=SP(AQ-Sq)
SP=standard price
AQ= actual qunatity used
sq=STANDARD QUANTITY ALLOWED
SP=14
AQ=1700
SQ=3.6*410=1476
=14*(1700-1476)=$-3136 (unfavourable)
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