7. Diamond Company produces a chair that requires 4 yds. of material per unit. T

Question

7. Diamond Company produces a chair that requires 4 yds. of material per unit. The standard price of one yard of material is $13.60. During the month, 7,600 chairs were manufactured, using 29,800 yards at a cost of $14.42. Enter FAVORABLE variances as negative numbers.

(c) Determine the cost variance. $ Favorable or Unfavorable?

(a) Determine the price variance. $ Favorable or Unfavorable? (b) Determine the quantity variance. $ Favorable or Unfavorable?

(c) Determine the cost variance. $ Favorable or Unfavorable?

Explanation / Answer

ANS:

(a) Price variance - ($13.60 - $14.42) * 29,800 = $24,436 unfavorable

(b) Quantity variance - ((4 * 7,600)

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