t-take&inprogress; false Caloulator Direct Materials Variances The following dat
ID: 2510578 • Letter: T
Question
t-take&inprogress; false Caloulator Direct Materials Variances The following data relate to the direct materials cost for the production of 2,500 automobile tires: Actual56,400 lbs. at $2.0S $115,620 Standard 54,700 lbs. at $2.00 $109,400 a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter favorable variances as negative numbers Enter unfavorable variances as positive numbers Price variance Quantity varlance Total direct materials cost variance of equipment that b. The direct materials price variance should normally be reported to t had not been properly operated should be reported to the .The direct materials quantity variance due to a malfunction The total materials cost variance should be reported to the Next Save and Exit Submit Assignment for GradingExplanation / Answer
Solution :
a. Variance Analysis :
Direct Material Price Variance = Actual Quantity *(Actual Rate - Standard Rate) = 56,400* (2.05-2) = 2,820 U
Direct Material Quantity Variance = Standard Price * ( Actual Qty- Standard Qty) = 2 * (56,400- 54,700) = 3,400 U
Both the above are unfavourable since the actual rates and the actual Qty are more than the standard budget
Hence, Total Direct Material Cost Variance would be the total of both the above variances = 6,220 U
b. The direct materials price variance should normally be reported to the Purchasing Department. Since they are responsible for the purchase rate of the materials.
The direct material quantity variance due to a malfunction of equipment that had not been properly operated should be reported to the production department since they are in charge of the converion of materials into finished goods.
The total materials cost variance should be reported to the purchasing department as they are solely responsible for the ordering of the raw materials based on the budget requirement.
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