Q4. The standards for product J42 call for 3.6 feet of a raw material that costs

Question

Q4. The standards for product J42 call for 3.6 feet of a raw material that costs $14.00 per feet. Last month, 5,500 feet of the raw material were purchased for $76,175. The actual output of the month was 1,260 units of product J42. A total of 4,800 feet of the raw material were used to produce this output.

Required:
a. What is the materials price variance for the month?
b. What is the materials quantity variance for the month?
c. Prepare journal entries to record the purchase and use of the raw material during the month. (All raw materials are purchased on account.)

Explanation / Answer

Solution:-

a. Materials price variance for the month:-

= (AQ × AP) - (AQ × SP)

= $76,175 - (5,500 feet × $14 per foot)

= $76,175 - $77,000 = $825 F

b. Materials quantity variance for the month:-

= (AQ - SQ) SP

= (4,800 feet - 4,536 feet*) $14 per foot

= (264 feet) $14 per foot = $3,696 U

*3.6 feet per unit × 1,260 units = 4,536 feet

c. Journal entries:-

Record the purchase of raw material:-

Record the use of raw material:-

Please Rate or comment if you have any doubt regarding this solution.

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