Acoma, Inc., has determined a standard direct materials cost per unit of $6.80 (

Question

Acoma, Inc., has determined a standard direct materials cost per unit of $6.80 (2 feet × $3.40 per foot). Last month, Acoma purchased and used 4,620 feet of direct materials for which it paid $15,246. The company produced and sold 2,170 units during the month. Calculate the direct materials price, quantity, and spending variances. (Round your intermediate calculations to 2 decimal places. Indicate the effect of eaclh variance by selecting "F" for favorable, "U" for unfavorable.) Direct Materials Price Variance Direct Materials Quantity Variance Direct Materials Spending Variance

Explanation / Answer

Material Price variance = (Standard rate - Actual rate) * Actual quantity

Standard rate per foot = $3.40

Actual rate = (15,246/4,620) = $3.30

Material Price variance = (3.40-3.30)*4,620 = 462 Favourable

Material quantity variance = (Standard quantity used - Actual quantity) * Standard rate

standard quantity required for actual output = 2,170units*2 = 4,340

Material quantity variance = (4,340-4,620)*$3.30 = -$924 Unfavourable

Material spending variance = price variance +quantity variance = 462-924 = -$462 Unfavourable

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