Question

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)

Answer 1

Answer:

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