Exercise 15-5 (Part Level Submission) The standard cost of Product B manufacture
ID: 366972 • Letter: E
Question
Exercise 15-5 (Part Level Submission) The standard cost of Product B manufactured by Blue Company includes 2.00 units of direct materials at $6.90 per unit. During June, 27,500 units of direct materials are purchased at a cost of $6.85 per unit, and 27,500 units of direct materials are used to produce 13,700 units of Product B. Your answer is correct. Compute the total materials variance and the price and quantity variances. xcarass Total materials variance Materials price variance Materials quantity variance 375 Fa $690 Unfavorabl Attempts: 2 of 2 used Compute the total materials variance and the price and quantity variances, assuming the purchase price is $6.95 and the quantity purchased and used is 26,500 units Total materials variance Materials price variances Materials quantity variance sExplanation / Answer
Ans:
a) Computation of material variances
Computation of standard material cost for actual output = 13700 * 2 * $6.90
= $189060
1) Total Material Variance = Standard material cost - Actual material cost
= $189060 - (27500 * $6.85)
= $189060 - $188375
= $685(Favorable)
2) Material price variance = (Standard price - Actual price) * Actual Quantity
= ($6.9 - $6.85) * 27500
= $1375 (Favorable)
3) Material quantity Variance = (Standard quantity - Actual Quantity) * standard price
= (( 13700* 2) - 27500 ) * $6.9
= (27400 - 27500 ) * $6.9
= $690 (Adverse)
B) Computation of material variances
Computation of standard material cost for actual output = 13700 * 2 * $6.90
= $189060
1) Total Material Variance = Standard material cost - Actual material cost
= $189060 - (26500 * $6.95)
= $189060 - $184175
= $4885(Favorable)
2) Material price variance = (Standard price - Actual price) * Actual Quantity
= ($6.9 - $6.95) * 26500
= $1325 (Adverse)
3) Material quantity Variance = (Standard quantity - Actual Quantity) * standard price
= (( 13700* 2) - 26500 ) * $6.9
= (27400 - 26500 ) * $6.9
= $6210 (Favorable)
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