Warner, Inc., produces Product Y. Each unit required 1 yard of material. The com
ID: 2464566 • Letter: W
Question
Warner, Inc., produces Product Y. Each unit required 1 yard of material. The company produced 470 units during October. However, due to defects in the fabric, the company actually used 400 yards of material during October. Each yard has a standard price of $6.40. The company purchased 490 yards for October production at a cost of $2,865. Determine the price variance, quantity variance, and total direct materials cost variance for October. 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.Explanation / Answer
Excess Quantity of yard used= 490-470= 20 yard
Quantity variance = (Actual Qty- Std Qty) * Std rate
Quantity variance= 20*6.4 = $128
Price variance = (Std Price- Actual Price) * Actual Qty
Actual Price= 2865/490 = 5.85
Price Variance= (6.4-5.85) * 490= $269.5
Total direct material cost variance= Actual total cost- Std cost= (490*5.85 - 470*6.4) = 141.5
*5.85 is approximate value which may result in rounding off difference
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