The standard cost card for a product indicates that one unit of the product requires 8 kilograms of a raw material at $0.80 per kilogram. The production of the product in June was 870 units, but production had been budgeted for 850 units. During June, 8,200 kilograms of the raw material were purchased for $6,888 and 7,150 kilograms of the raw material were used in production. The material variances for June were: Material Price Variance Material Quantity Variance A) $286 U $152 U B) $286 U $280 U C) $328 U $152 U D) $328 U $280 U

Question

Devan Hutchinson

Business

23 July, 00:17

The standard cost card for a product indicates that one unit of the product requires 8 kilograms of a raw material at $0.80 per kilogram. The production of the product in June was 870 units, but production had been budgeted for 850 units. During June, 8,200 kilograms of the raw material were purchased for $6,888 and 7,150 kilograms of the raw material were used in production. The material variances for June were: Material Price Variance Material Quantity Variance A) $286 U $152 U B) $286 U $280 U C) $328 U $152 U D) $328 U $280 U

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Kierra Salas · Answer 1

C

Explanation:

Material price variance

Actual cost of materials = $ 6,888

Standard cost of material = 8200*0.8 = $6560

Variance (Difference between the actual and budgeted price for materials)

= (6888-6560)

= $328 unfavorable variance.

Material quantity variance

Standard material per unit = 8 kilogram

Actual units produced = 870

Standard material = 6960

Actual material used = 7150

Material quantity variance = Difference in quantity of material used multiplied by the standard cost of material (7150-6960) * 0.8

=$ 152 unfavorable variance

The two variances are unfavorable as they exceeded the budget