Exercise 11-5 The standard cost of Product B manufactured by MIT Company include
ID: 2452343 • Letter: E
Question
Exercise 11-5
The standard cost of Product B manufactured by MIT Company includes 2.20 units of direct materials at $5.10 per unit. During June, 27,000 units of direct materials are purchased at a cost of $5.05 per unit, and 27,000 units of direct materials are used to produce 12,100 units of Product B.
(a) Compute the total materials variance and the price and quantity variances.
Total materials variance
Materials price variance
Materials quantity variance
(b) Compute the total materials variance and the price and quantity variances, assuming the purchase price is $5.23 and the quantity purchased and used is 26,600 units.
Materials quantity variance
(b) Compute the total materials variance and the price and quantity variances, assuming the purchase price is $5.23 and the quantity purchased and used is 26,600 units.
Total materials variance Materials price variance Materials quantity varianceExplanation / Answer
a)Material price variance = AQ used (AP -SP)
= 27000 (5.05 - 5.10)
= 27000 * - .05
= - 1350 (F)
Material qauntity variance = SR ( AQ -SQ)
= 5.10 [27000 - (12100*2.2)]
= 5.10 [ 27000- 26620]
= 5.10 * 380
= 1938(U)
Total material variance = MPV +MQV
= -1350 (F) + 1938 (U)
= 588(U)
B)PRICE variance = 26600 (5.23- 5.10)
= 26600 * .13
= 3458(U)
quantity variance = 5.10 [26600 - (12100*2.2)]
= 15.10 [26600 - 26620]
= 15.10 * -20
= - 302(F)
Total variance = 588 (U) + (-302 F)
= 286 U
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