The following materials standards have been established for a particular product:Standard quantity per unit of output 4.8 poundsStandard price $12.00 per poundThe following data pertain to operations concerning the product for the last month:Actual materials purchased 3,700 poundsActual cost of materials used in production $43,105Actual materials used in production 3,000 poundsActual output 560 unitsWhat is the materials price variance for the month? (favorable or unfavorable) What is the materials quantity variance for the month? (favorable or unfavorable)

The materials price variance for the month is $1,295 favorable and the materials quantity variance for the month is $3,744 unfavorable

Explanation:

1. The formula to compute the material price variance is shown below:

= (Standard Price - Actual Price) * Actual Quantity

where,

Standard price is $12.00 per pound

Actual price is not given, so we have to compute it by using the formula which is shown below:

= Actual cost of materials used in production : Actual materials purchased

= $43,105 : $3,700 pounds

= $11.65

And, the actual quantity is 3,700

Now apply these values to the above formula

So, the answer would be

= ($12 - $11.65) * 3,700

= 0.35 * 3,700

= $1,295 favorable

2. The formula to compute the material quantity variance is shown below:

= (Standard Quantity - Actual Quantity) * Standard Price

where,

Standard quantity is not given, so we have to compute it by using the formula which is shown below:

= Actual output * Standard quantity per unit of output

= 560 units * 4.8 pounds

= 2,688

The Actual quantity is 3,000

And, the standard price is $12.00 per pound

Now apply these values to the above formula

So, the answer would be

= (2,688 - $3,000) * $12

= 312 * $12

= $3,744 unfavorable

Hence, the materials price variance for the month is $1,295 favorable and the materials quantity variance for the month is $3,744 unfavorable