The standard cost of Product B manufactured by Indigo Company includes 3.60 unit

Question

The standard cost of Product B manufactured by Indigo Company includes 3.60 units of direct materials at $5.90 per unit. During June, 26,600 units of direct materials are purchased at a cost of $5.65 per unit, and 26,600 units of direct materials are used to produce 7,300 units of Product B Compute the total materials variance and the price and quantity variances. Total materials variance Materials price variance Materials quantity variance Compute the total materials variance and the price and quantity variances, assuming the purchase price is $5.95 and the quantity purchased and used is 26,500 units Total materials variance Materials price variance Materials quantity variance

Explanation / Answer

1 Total Material Variance (Actual quantity* Actual Price)-(Std. quantity for actual prodn* Std .price) (26600*5.65)-(7300*3.60*5.90)= -4762 F Material Price variance (Actual price-Standard price)*Actual quntity (5.65-5.90)*26600= -6650 F Material Quantity variance (Actual quantity-Standard quantity)*Standard price/qty. (26600-(7300*3.60))*5.90= 1888 UF TMV=MPV+MQV 4762 F=6650 F+1888 UF 2 Total Material Variance (Actual quantity* Actual Price)-(Std. quantity for actual prodn* Std .price) (26500*5.95)-(7300*3.60*5.90) 2623 UF Material Price variance (Actual price-Standard price)*Actual quntity (5.95-5.90)*26500= 1325 UF Material Quantity variance (Actual quantity-Standard quantity)*Standard price/qty. (26500-(7300*3.60))*5.90= 1298 UF TMV=MPV+MQV 2623 UF=1325 UF+1298 UF

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