Simba Company’s standard materials cost per unit of output is $11.52 (2.40 pound

Question

Simba Company’s standard materials cost per unit of output is $11.52 (2.40 pounds x $4.80). During July, the company purchases and uses 2,800 pounds of materials costing $14,280 in making 1,200 units of finished product.

Compute the total, price, and quantity materials variances.

Total materials variance ____

$

Unfavorable, Favorable, Neither favorable nor unfavorable? Materials price variance ____

$

Unfavorable, Favorable, Neither favorable nor unfavorable? Materials quantity variance ____

$

Favorable, Unfavorable, Neither favorable nor unfavorable?

Explanation / Answer

Total Material variance = Actual cost -standard cost

                              = 14280 - (1200 *2.40* 4.80)

                               = 14280 - 13824

                               = 456 U

Material price variance = Actual cost - (AQ *SR)

                                      = 14280 - (2800 * 4.80)

                                       = 14280 - 13440

                                         = 840 U

Material quantity variance = (SR *AQ) - (SR*SQ)

                                     = (4.8 * 2800 ) - (4.8 * [1200*2.4])

                                     = 13440 - 13824

                                     = - 384 F

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