Zenue Manufacturing Company (ZMC) produces high-end acrylic shelves and furnitur

Question

Zenue Manufacturing Company (ZMC) produces high-end acrylic shelves and furniture used in such stores as Pinkberry. ZMC's standard and actual prices per pound of raw material are $4.00 and $4.50, respectively. This month, a total of 10,500 pounds of raw material was purchased and then used to produce 5,000 units. The quantity standard allows two pounds of the raw material per unit produced. What is the materials quantity variance?

a. Calculate: what is the materials quantity variance?

b. Calculate: what is the material price variance?

Explanation / Answer

Hi,

Please find the detailed answer as follows:

a.Materials quantity variance = Standard Rate*(Actual Quantity - Standard Quantity of Material Used for Actual Production) = 4*(10500 - 5000*2) = 2000 (Unfavorable)

b. Material price variance = Actual Quantity*(Actual Rate - Standard Rate) = 10500*(4.50 - 4) = 5250 (Unfavorable)

Thanks.

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