Question

Direct Materials Variances The following data relate to the direct materials cost for the production of 2,300 automobile tires: Actual: 52,400 lbs. at $1.7 per lb. Standard: 53,400 lbs. at $1.75 per lb. a. Determine the direct materials price variance, direct materials quantity variance, and 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. Direct Materials Price Variance $ Direct Materials Quantity Variance $ Total Direct Materials Cost Variance $ b. The direct materials price variance should normally be reported to the . When lower amounts of direct materials are used because of production efficiencies, the variance would be reported to the . When the favorable use of raw materials is caused by the purchase of higher-quality raw materials, the variance should be reported to the

Answer 1

Answer:

Direct Material Price Variance = ( Ap - Sp) * AQ

($1.70 - $1.75) * 52,400 = (-0.05)*52,400 = -$2,620 Favorable

Direct Material Quantity Variance = ( Aq - Sq)* Sp

( 52,400 -53,400) $1.75 = -$1,750 Favorable

Total materials cost variance = Material price variance + Material quantity variance

                                                 = -$2,260 (f) + -$1,750 (f)

                                                =-$4,010 (F)

Explanation:

Ap = Actual Price

Sp = Standard Price

Aq = Actual Quantity

Sq = Standard Quantity

F= Favorable