The following materials standards have been established for a particular product

Question

The following materials standards have been established for a particular product: Standard quantity per unit of 3.9 grams output Standard price $12.00 per grams The following data pertain to operations concerning the product for the last month: Actual materials purchased Actual cost of materials purchased Actual materials used in production Actual output 2,800 grams 32,620 2,100 grams 490 units The direct materials purchases variance is computed when the materials are Required a. What is the materials price variance for the month? (Input the amount as a positive value. Leave no cells blank - be certain to enter "0" 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.) b. What is the materials quantity variance for the month? (Input the amount a as 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.) terials quantity

Explanation / Answer

a. Material Price Variance = (Standard Price-Actual Price)*Actual Quantity used = (12.00-11.65)*2100 = $ 735 F Working: Actual Material Price per unit = Actual cost of materials/Actual Materials purchased = $       32,620 / 2800 = $         11.65 b. Material Quantity Variance = (Standard Quantity-Actual Quantity)*Standard Material Price = (1911-2100)*12.00 = $ 2,268 U Working: Standard Quantity of materials = Actual Output*Standard Material per unit = 490*3.9 = 1911

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