Direct Materials Variances Tip Top Corp. produces a product that requires eight
ID: 2548306 • Letter: D
Question
Direct Materials Variances
Tip Top Corp. produces a product that requires eight standard gallons per unit. The standard price is $7 per gallon. If 6,500 units required 54,100 gallons, which were purchased at $6.72 per gallon, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
a. Direct materials price variance $ b. Direct materials quantity variance $ c. Direct materials cost variance $Explanation / Answer
a) Direct material price variance (actual price - standard price)*AQ purchased (6.72 - 7)*54,100 15148 F b) Direct materials Quantity variance (Actual qty used - std qty allowed)*standard price (54,100 - 6500*8)*7 14700 U c) Direct material cost variance 448 F
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