Question

Materials Variances Krumple Inc. produces aluminum cans. Production of 12-ounce cans has a standard unit quantity of 4.5 ounces of aluminum per can. During the month of April, 300,000 cans were produced using 1,240,000 ounces of aluminum. The actual cost of aluminum was $0.18 per ounce and the standard price was $0.08 per ounce. There are no beginning or ending inventories of aluminum. Required: Calculate the materials price and usage variances using the columnar and formula approaches. Enter amounts as positive numbers and select Favorable or Unfavorable. Materials Price Variance$fill in the blank 1 Material Usage Variance$fill in the blank 3

Answer 1

Solution :

Variance                          Calculations                                         Result

Direct material        0.08(300,000 x 4.5 - 1,240,000)           8,800 favorable

usage variance      

Direct material          1,240,000 x (0.08 - 0.18)                      124,000 unfavorable

price variance

                         

The standard quantity =  actual production x standard quantity per unit

                                     =  300,000 x 4.5

                                     = 1,350,000