Direct Materials Variances I-Time, Inc., produces electronic timepieces. The com

Question

Direct Materials Variances

I-Time, Inc., produces electronic timepieces. The company uses mini-LCD displays for its products. Each timepiece uses one display. The company produced 480 timepieces during October. However, due to LCD defects, the company actually used 500 LCD displays during October. Each display has a standard cost of $6.60. The company purchased 500 LCD displays for October production at a cost of $2,905.

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.

Price variance $ Select Favorable Unfavorable Quantity variance $ Select Favorable Unfavorable Total direct materials cost variance $ Select Favorable Unfavorable

Explanation / Answer

Standard Costs Qty/Hr Rate Cost   Direct Materials                   1.00                 6.60                 6.60 Actual Information Details Actual units Actual Qty/Hr Actual Rate Actual Amt Std Qty/Hr Actual Output Direct Materials                     480                  500                 5.81            2,905            480 Direct Materials Price Variance= Actual Qty Used( Actual Rate-Std Rate) =500*(5.81-6.6)                     395 (F) Direct Material Efficiency Variance =Std Rate ( Actual Qty used-Std qty for actual output)      =6.60*(500-480)                     132 (U) Total Direct Material Cost Variance= =3168-2905                     263 F

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