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14 November, 14:45

Gates Corporation reported the following information concerning its direct materials: Direct materials purchased (actual) $ 673,000 Standard cost of materials purchased $ 688,000 Standard price times actual amount of materials used $ 444,000 Actual production 22,000 units Standard direct materials costs per unit produced $ 20Required: Compute the direct materials cost variances.

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  1. 14 November, 15:01
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    The answer is 15000 F

    Explanation:

    Solution

    Given that:

    Direct materials purchased = $673,000

    Standard cost of materials purchased = $688,000

    Actual production = 22,000 unit

    Standard price times real amount of materials = $ 444,000

    Now we find the direct materials cost variances.

    Thus

    Direct material price variance = (444000-673000)

    = 229000 U

    Then

    Direct material efficiency variance = (688000-444000)

    = 244000 F

    Total cost variance = (688000-673000)

    = 15000 F

    Therefore the direct materials variances is 15000 F
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