Computing Materials Variances Calculate the following: Use \"F\" and \"U\" to de

Question

Computing Materials Variances

Calculate the following:

Use "F" and "U" to designate favorable and unfavorable variances. Enter all amounts as positive numbers.

Computing Materials Variances

D-List Calendar Co. specializes in manufacturing calendars that depict obscure comedians. The company uses a standard cost system to control its costs. During one month of operations, the direct materials costs and the quantities of paper used showed the following:

Calculate the following:

Use "F" and "U" to designate favorable and unfavorable variances. Enter all amounts as positive numbers.

1. Total cost of purchases for the month $ 2. Materials purchase price variance $ 3. Materials quantity variance $ 4. Net materials variance $

Explanation / Answer

1. Total cost of purchases for the month = $.175 x 200,000 = $35,000

2. Materials purchase price variance = (Standard price - Actual price) x Qty. purchased
= ($.17 - $.175) x 200,000 = $1,000 Unfavorable

3. Materials quantity variance = (Standard qty. - Actual qty.) x Standard price
= (170,000 - 185,000) x $.17 = $2,550 Unfavorable

4. Net materials variance = $1,000 + $2,550 = $3,500 Unfavorable

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