Regent Corp uses a standard cost system to account for the costs of its one prod
ID: 2585466 • Letter: R
Question
Regent Corp uses a standard cost system to account for the costs of its one product. Materials standards are 2.8 pounds of material at $13 per pound and 3 hours of labor at a standard wage rate of $10. During July Regent Corp produced 3,300 units. Materials purchased and used totaled 10,010 pounds at a total cost of $131,730. Payroll totaled $147,380 for 13,160 hours worked. a. Calculate the direct materials price variance. (Do not round your intermediate calculations. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (l.e, zero variance).) nce b. Calculate the direct materials quantity varlance. (Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance)-) Type here to searchExplanation / Answer
Answer:-
Material price variance = (Standard price – Actual price) * Actual quantity used
= ($13.00 per pound - $13.159840 per pound)*10010 pounds used
= $1600 Unfavourable
Material Quantity variance = (Standard Quantity- Actual Quantity)*Standard price
=(9240 pounds – 10010 pounds)*$13.00 per pound
= $10010 Unfavourable
Where:-
Standard quantity = Pounds of material per unit*Actual Production
=2.80 pounds of material per unit*3300 units
= 9240 pounds
Where:-
Standard cost = Price per pound* Pounds of material per unit *Actual Production
=$13.00*2.80 Pounds of material per unit *3300 units
= $120120
Actual cost = $131730
Explanation:-
Material cost variance = Standard Cost – Actual cost
=$120120 – $131730 = $11610 Unfavourable
Material cost variance = Material price variance+Material Qunatity variance
$11610 Unfavourable =$1600 Unfavourable +$10010 Unfavourable
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