Acoma, Inc., has determined a standard direct materials cost per unit of $6.80 (

Question

Acoma, Inc., has determined a standard direct materials cost per unit of $6.80 (2 feet × $3.40 per foot). Last month, Acoma purchased and used 4,400 feet of direct materials for which it paid $14,520. The company produced and sold 2,090 units during the month.

Calculate the direct materials price, quantity, and spending variances. (Round your intermediate calculations to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)

Direct Matrerial Price Variance

Direct Material Quantity Variance

Direct Matreials Spending Variance

Calculate the direct materials price, quantity, and spending variances. (Round your intermediate calculations to 2 decimal places. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)

Direct Matrerial Price Variance

Direct Material Quantity Variance

Direct Matreials Spending Variance

Explanation / Answer

Solution:

Direct Material Price Variance = Actual Quantity (Standard Price – Actual Price) = Actual Quantity x Standard Price – Actual Quantity x Actual Price

= (4,400 x $3.40) - $14,520

= $14,960 - $14,520 = $440 F

Direct Material Quantity Variance = Standard Price (Standard Quantity for actual production – Actual Quantity Used)

= $3.40 (4,180 – 4,400) = $748 U

Standard Quantity for actual production = 2,090 Units x 2 feet per unit = 4,180 feet

Direct Material Spending Variance = Standard Cost – Actual Cost

= Standard Quantity for actual production x Standard Price – Actual Quantity x Actual Price

= (4,180 x $3.40) – $14,520

= $14,212 - $14,520 = $308 U

Or

Direct Material Spending Variance can also be calculated by following formula;

Direct Material Spending Variance = Direct Material Price Variance + Direct Material Quantity Variance = $440 F + $748 U = $308 U

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