Question

The following data relate to the direct materials cost for the production of 2,200 automobile tires:

Actual: 55,500 lbs. at $1.7 per lb.
Standard: 56,600 lbs. at $1.65 per lb.

Required:
Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance.

Answer 1

Answer and Explanation:

The computation is given below:

Direct Material price variance is

= ($1.70 per lb - $1.65 per lb) × 55,500 lbs.

= $2,775 Unfavorable

Direct Material quantity variance is

= (55,500 lbs. - 56,600 lbs.) × $1.65 per lb

= $-1,815 Favorable

Total Direct Materials Cost Varianceis

= Actual Materials Cost  - Standard Materials Cost  

= (55,500 lbs. × $1.70 per lb) - (56,600 lbs. × $1.65 per lb)

= $94,350 - $93,390

= $960 Unfavorable