Computing materials, labor, and cost variance The following data were drawn from

Question

Computing materials, labor, and cost variance
The following data were drawn from the records of Quentin Corporation:
Planned volume for year (static budget) 6,000 units
Standard direct materials cost per unit 3.1 pounds @ $3.00 per pound
Standard direct labor cost per unit 2 hours @ $8.00 per hour
Total expected fixed overhead costs $56,400
Actual volume for the year (flexible budget) 6,300 units
Actual direct materials cost per unit 2.7 pounds @$4.00 per pound
Actual direct labor cost per unit 2.3 hours @$7.20 per hour
Total actual fixed overhead costs $45,000
Required
Prepare a materials variance information table showing the standard price, the actual price, the standard quantity, and the actual quantity

Explanation / Answer

Standard direct materials per unit = 3.1 pounds

Standard direct materials cost per pound = 3

Actual units = 6,300

Actual direct materials per unit = 2.7 pounds

Actual direct materials cost per pound = 4

Materials price variance = Actual quantity * (Standard price - Actual price)

= 6,300 * 2.7 * (3 - 4)

= 17,010 unfavourable

Materials quantity variance = Standard price * (Standard quantity - Actual quantity)

= 3 *[(6,300 * 3.1) - (6,300 * 2.7)]

= 7,560 favouravble

Total Materials variance = (Actual quantity * Actual price) - (Standard quantity * Standard price)

= (6,300 * 3.1 * 3) - (6,300 * 2.7 *4)

= 9,450 unfavourable

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