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29 April, 05:41

Direct Materials Variances Dvorak Company produces a product that requires 5 standard pounds per unit. The standard price is $2.50 per pound. If 1,000 units required 4,500 pounds, which were purchased at $3.00 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) 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.

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  1. 29 April, 05:57
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    (a) 2,250 unfavorable

    (b) $1,250 favorable

    (c) $1,000 unfavorable

    Explanation:

    (a) Material price variance:

    = Actual quantity (Standard price - actual price)

    = 4,500 (2.50 - 3.00)

    = $2,250 unfavorable

    (b) Material quantity variance:

    = Standard price (standard quantity - actual quantity)

    = 2.50 (5,000 - 4,500)

    = $1,250 favorable

    (c) Material cost variance:

    = Standard cost - Actual cost

    = 12,500 - 13,500

    = $1,000 unfavorable

    Material cost variance = Material price variance + Material quantity variance

    = 2,250 + (-1,250)

    = $1,000
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