Direct Materials Variances I-Time, Inc., produces electronic timepieces. The com

Question

Direct Materials Variances

I-Time, Inc., produces electronic timepieces. The company uses mini-LCD displays for its products. Each timepiece uses one display. The company produced 500 timepieces during October. However, due to LCD defects, the company actually used 520 LCD displays during October. Each display has a standard cost of $6.8. The company purchased 520 LCD displays for October production at a cost of $2,910.

Determine the price variance, quantity variance, and total direct materials cost variance for October.

Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Price variance $ Favorable Quantity variance $ Unfavorable Total direct materials cost variance $ Favorable

Explanation / Answer

Determine the price variance, quantity variance, and total direct materials cost variance for October.

Price variance (6.8*520-2910) 626 Favourable Quantity variance (500-520)*6.8 136 Unfavorable Total direct materials cost variance 490 Favorable

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