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Rocky Mountain Camping Equipment, Inc. has established the following direct-material standards for its two products.
Standard Quantity Standard Price
Standard camping tent 21 yards $9.50 per yard
Deluxe backpacking tent 16 yards $7.60 per yard
During March, the company purchased 5,900 yards of tent fabric for its standard model at a cost of $22,420. The actual March production of the standard tent was 290 tents, and 2,670 yards of fabric were used. Also during March, the company purchased 2,900 yards of the same tent fabric for its deluxe backpacking tent at a cost of $14,500. The firm used 1,480 yards of the fabric during March in the production of 370 deluxe tents.
Required:
1. Compute the direct-material purchase price variance and quantity variance for March.
2. Prepare journal entries to record the purchase of material, use of material, and incurrence of variances in March.

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tutorAnne

Answer: Please see explanation column for answer

Explanation:

TENT TYPE---STANDARD  CAMPING TENT

Standard camping tent 21 yards $9.50 per yard

Actual qty purchased in yards = 5900

Actual qty used= 2670

Standard Price= $9.50

Standard quantity yards =290x21= 6090 yards

Actual price per yard= $22,420/5900=$3.8

TENT TYPE---DELUXE  BACKPACKING TENT

Deluxe backpacking tent 16 yards $7.60 per yard

Actual qty purchased in yards =2900

Actual qty used= 1480

Standard quantity yards =370X 16= 5920 Yards

Actual price per yard= $14,500/ 2900= $5

Standard price= $7.60

A) To find Direct Material Price Variance

For Standard  Model

Actual quantity purchased x Actual price=5900x3.8=$22,420

Actual quantity x Standard price=5900x9.50= $56,050  

Direct Material Price Variance which is favourable is given by $56,050 - $22,420= $33, 630

For Deluxe

Actual quantity purchased x Actual price= 2900x 5.0= 14,500

Actual quantity x Standard price=2900x7.60=$22,040

Direct Material Price Variance which is favourable is given by = $22,040-14500=$7540

TOTAL DIRECT MATERIAL PURCHASE  PRICE VARIANCE = $33,630-$7,540=$26,090

B) To find Direct Material Quantity Variance

For Standard  

Actual quantity x standard price= 2,670x $9.50=$25,365

Standard quantity x Standard price=6090x9.50= $57, 855

Direct Material Quantity Variance which is Favorable is given by $57,855-$25,365= $32,490

For Deluxe

Actual quantity x standard price= 1480 x $7.60=$11,248

Standard quantity x Standard price= 5920 x $7.60= $44,992

Direct Material Price Variance which is Favorable is given by $44,992 -$11,248= $33,744

TOTAL DIRECT MATERIAL QUANTITY VARIANCE = $33,744-$32,490 =$1254

Journal to record purchase of materials and incurred price variance

March

Raw materials inventory ----Debit  78,090……….(5900x9.50  + 2900x7.60)

Direct Materials price variance-----Debit $26,090

Accounts Payable----------------Credit $36, 920……..($=$22,420+14,500 )

Journal to record use of direct materials  and Incurred price variance

March

Work in progress inventory ----Debit  102,847 ……….(6090 x$9.5 + 5920 x 7.60)

Direct Materials quantity variance-----Debit $1254

Accounts Payable----------------Credit $36,613……. .....(2670 x 9.5+ 1480 x 7.60)

The direct-material purchase price variance and quantity variance for March is :

For Standard  Model= $33, 630 , $32,490

For Deluxe Model= $26,090 , $1254

Rocky Mountain Camping Equipment

What all information we have ?

Standard camping tent 21 yards $9.50 per yard

Actual qty purchased in yards = 5900

Actual qty used= 2670

Standard Price= $9.50

Standard quantity yards =290x21= 6090 yards

Actual price per yard= $22,420/5900=$3.8

Deluxe backpacking tent 16 yards $7.60 per yard

Actual qty purchased in yards =2900

Actual qty used= 1480

Standard quantity yards =370X 16= 5920 Yards

Actual price per yard= $14,500/ 2900= $5

Standard price= 0$7.60

Part A) To find Direct Material Price Variance is :

For Standard  Model

Direct Material  Variance=Actual quantity purchased x Actual price

Direct Material  Variance=5900x3.8

Direct Material Price Variance=$22,420

Actual quantity x Standard price=5900x9.50= $56,050  

Direct Material Price Variance which is favourable is given by $56,050 - $22,420

Direct Material Price Variance = $33, 630

For Deluxe

Actual quantity purchased x Actual price= 2900x 5.0= 14,500

Actual quantity x Standard price=2900x7.60=$22,040

Direct Material Price Variance which is favourable is given by = $22,040-14500=$7540

Total Direct Material = $33,630-$7,540

Total  Direct Material =$26,090

Part B) To find Direct Material Quantity Variance

For Standard  

Actual quantity x standard price= 2,670x $9.50=$25,365

Standard quantity x Standard price=6090x9.50= $57, 855

Direct Material Quantity Variance which is Favorable is given by  =$57,855-$25,365

= $32,490

For Deluxe

Actual quantity x standard price= 1480 x $7.60=$11,248

Standard quantity x Standard price= 5920 x $7.60= $44,992

Direct Material Price Variance which is Favorable is given by :

=$44,992 -$11,248

= $33,744

Total direct material quality variance = $33,744-$32,490

Total direct material quality variance=$1254

2. The Journal to record purchase of materials and incurred price variance is :

March

Raw materials inventory Dr.                      78,090

Direct Materials price variance Dr.          $26,090

Accounts Payable   Cr.                                                            $36, 920

(Journal to record use of direct materials  and Incurred price variance)

March

Work in progress inventory Dr.                $ 102,847

Direct Materials quantity variance Dr.      $1254

Accounts Payable Cr.                                                                   $36,613

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