00 cricket 10:26 AM 79% D\' Perfect Pet Collar Company makes custom leather pet

Question

00 cricket 10:26 AM 79% D' Perfect Pet Collar Company makes custom leather pet collars. The company expects each collar to require 2.30 feet of leather and predicts leather will cost $4.10 per foot. Suppose Perfect Pet made 80 collars during February. For these 80 collars, the company actually averaged 2.40 feet of leather per collar and paid $3.65 per foot. Required: 1. Calculate the standard direct materials cost per unit. (Round your answer to 2 decimal places.) Standard Direct Materials Ercollar] 2. Without performing any calculations, determine whether the direct materials price variance will be favorable or unfavorable. Direc t Material Price Variance

Explanation / Answer

Solution:

1) Standard direct materials cost per unit = 2.30 * $4.10
= $9.43
2) Without performing any calculations, direct materials price variance will be Favourable, because actual price is less than standard price.

3) Without performing any calculations, direct materials price variance will be UnFavourable, because actual required quantity is more than standard quantity.

6) Direct material quantity variance = AQ * (SP - AP)
= 80 * 2.40 * ($4.10 - $3.65)
= 192 * 0.45 = 86.4 (Favourable)

Direct material quantity variance = SP * (SQ - AQ)
= 80 * $4.10 * ($2.30 - $2.40)
= $328 * -0.1
= -$32.8 (Unfavorable)

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