E9-6 Calculating Direct Materials Variances [LO 9-3] Parker Plastic, Inc., manuf

Question

E9-6 Calculating Direct Materials Variances [LO 9-3]

Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows:

Parker Plastic had the following actual results for the past year:

Required:
Calculate Parker Plastic’s direct materials price and quantity variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.)

Standard Quantity Standard Price (Rate) Standard Unit Cost Direct materials (plastic) 13 sq ft. $ 0.93 per sq. ft. $ 12.09 Direct labor 0.3 hr. $ 10.90 per hr. 3.27 Variable manufacturing overhead (based on direct labor hours) 0.3 hr. $ 2.40 per hr. 0.72 Fixed manufacturing overhead $364,800 ÷ 912,000 units) 0.40

Explanation / Answer

Direct material price variance = (0.93*11500000-10350000) = 345000 F

Direct material quantity variance = (1060000*13-11500000)*.93 = 2120400 F

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