Question

g Bellingham Company produces a product that requires 12 standard pounds per unit. The standard price is $2.5 per pound. If 3,400 units used 39,600 pounds, which were purchased at $2.55 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance

Answer 1

Answer and Explanation:

The computation is shown below:

(a)

Direct material price variance is

= ($2.5 - $2.55) × 39,600

= $1,980 Unfavourable

(b)

Direct material quantity variance is

= (3,400 × 12 -  39,600) × 2.50

= $3,000 favorable

(c)

And, Direct material cost variance is

= (3,400 × 12 × $2.50) -( 39,600 × $2.55)

= $1,020 unfavorable

The same is to be considered