The standard cost of Product B manufactured by MIT Company includes 2.90 units o
ID: 2493868 • Letter: T
Question
The standard cost of Product B manufactured by MIT Company includes 2.90 units of direct materials at $5.90 per unit. During June, 27,100 units of direct materials are purchased at a cost of $5.73 per unit, and 27,100 units of direct materials are used to produce 9,200 units of Product B.
(a) Compute the total materials variance and the price and quantity variances.
Total materials variance $ _______________/ (Favorable or Unfavorable)
Materials price variance $ _______________/ (Favorable or Unfavorable)
Materials quantity variance $ _______________/ (Favorable or Unfavorable)
(b) Compute the total materials variance and the price and quantity variances, assuming the purchase price is $6.04 and the quantity purchased and used is 26,900 units.
Total materials variance $ _______________/ (Favorable or Unfavorable)
Materials price variance $ _______________/ (Favorable or Unfavorable)
Materials quantity variance $ _______________/ (Favorable or Unfavorable)
Explanation / Answer
AR - Actual Rate
SR - Standard Rate
AQ - Actual Quantity
SQ - Standard Quantity
Material Price Variance = (AR - SR ) * AQ
= (5.73 - 5.9 ) * 27100 = 4607 Favourable
Material Quantity Variance = (AQ - SQ ) * SR
= (27100 - 9200*2.9 ) * 5.9 = 2478 Unfavourable
Total Material Variance = Price variance + Usage variance
= 4607 - 2478 = 2129 Favourable
At purchase price of 6.04 and qty of 26900
Material Price Variance = (AR - SR ) * AQ
= (6.04 - 5.9 ) * 26900 = 3766 Unfavourable
Material Quantity Variance = (AQ - SQ ) * SR
= (26900 - 9200*2.9 ) * 5.9 = 1298 Unfavourable
Total Material Variance = Price variance + Usage variance
= 3766 + 1298 = 5064 Unfavourable
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.