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12 January, 00:16

Direct Materials Variances The following data relate to the direct materials cost for the production of 10,000 automobile tires: Actual: 145,000 lbs. at $2.80 per lb. Standard: 150,000 lbs. at $2.75 per lb. a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct Materials Price Variance $ Direct Materials Quantity Variance $ Total Direct Materials Cost Variance $ b. The direct materials price variance should normally be reported to the. If lower amounts of direct materials had been used because of production efficiencies, the variance would be reported to the. If the favorable use of raw materials had been caused by the purchase of higher-quality raw materials, the variance should be reported to the.

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  1. 12 January, 00:24
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    direct materials price variance = $7,250

    direct materials quantity variance = - $13,750

    total direct materials cost variance = - $6,500

    The direct materials price variance should normally be reported to the Purchasing Manager.

    Variance in direct materials used would be reported to the Production Manager

    The favorable variance caused by purchase of higher-quality raw materials would be reported to Purchasing Manager

    Explanation:

    direct materials price variance = (Aq * Ap) - (Aq * Sp)

    = (145,000 * $2.80) - (145,000 * $2.75)

    = $7,250 A

    direct materials quantity variance = (Aq - Sp) - (Sq * Sp)

    = (145,000 * $2.75) - (150,000 * $2.75)

    = $13,750 F

    total direct materials cost variance = direct materials price variance + direct materials quantity variance

    = $7,250 A + $13,750 F

    = $6,500 F

    The direct materials price variance should normally be reported to the Purchasing Manager.

    Variance in direct materials used would be reported to the Production Manager

    The favorable variance caused by purchase of higher-quality raw materials would be reported to Purchasing Manager

    Note

    Variances are reported to responsible managers.
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