The following materials standards have been established for a particular product

Question

The following materials standards have been established for a particular product:

Standard quantity per unit of output 3.5 grams

Standard price $12.00 per grams

The following data pertain to operations concerning the product for the last month:

Actual materials purchased 2,300 grams

Actual cost of materials purchased $ 26,795

Actual materials used in production 1,600 grams

Actual output 420 units

The direct materials purchases variance is computed when the materials are purchased.

Part 1: What is the materials price variance for the month? Part 2: Favorable, Unfavorable, or No Effect?

Part 1: What is the materials quantity for the month? Part 2: Favorable, Unfavorable, or No Effect?

Explanation / Answer

solution :

materials price variance 805 Favourable (standard price - actual price) x actual quantity purchased (12 - (26795/2300)) * 2300 materials quantity variance -1560 UnFavourable (standard quantity - actual Quantity) x standard price (420*3.5 - 1600)*12

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