Direct Materials Variances The Silicone Engine Inc. produces wrist-worn tablet c
ID: 2447824 • Letter: D
Question
Direct Materials Variances
The Silicone Engine Inc. produces wrist-worn tablet computers. The company uses Thin Film Crystal (TFC) LCD displays for its products. Each tablet uses one display. The company produced 580 tablets during December. However, due to LCD defects, the company actually used 600 LCD displays during December. Each display has a standard cost of $15.00. Six hundred LCD displays were purchased for December production at a cost of $8,550.
Determine the price variance, quantity variance, and total direct materials cost variance for December. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your per unit computations to nearest cent, if required.
Price variance $ Quantity variance $ Total direct materials cost variance $Explanation / Answer
Actual purchase price of the display = 8550/580 i.e 14.74138
Direct material price variance = ( Standard price - Actual Price ) * Quantity actually used
= ( 15-14.74138) * 600
= 155.172 Favourable
Direct material Quantity Variance = ( Stanadrd quantity - Actual Quantity ) Standard Rate
= ( 580-600) *15 i.e 300 Unfavourable
Direct material cost variance = Direct Material Price Variance + Direct Material Quantity Variance
= 300 Unfavourable - 155.172 Favourable = 144.828 unfavourable
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