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Math  /  Data & Statistics

QuestionCurrent Attempt in Progress The standard cost of Product B manufactured by Pharrell Company includes 3 units of direct materials at $5.00\$ 5.00 per unit. During June, 29,000 units of direct materials are purchased at a cost of $4.70\$ 4.70 per unit, and 29,000 units of direct materials are used to produce 9,400 units of Product B. (a)
Compute the total materials variance and the price and quantity variances.
Total materials variance \ \square \square$
Materials price variance \ \square \square$
Materials quantity variance \ \square \square$ (b)
Compute the total materials variance and the price and quantity variances, assuming the purchase price is $5.15\$ 5.15 and the quantity purchased and used is 28,000 units.

Studdy Solution

STEP 1

1. The standard cost for direct materials is $5.00 \$5.00 per unit.
2. The actual cost for direct materials in June is $4.70 \$4.70 per unit for 29,000 units.
3. The actual production uses 29,000 units of direct materials to produce 9,400 units of Product B.
4. The standard quantity of materials for 9,400 units of Product B is 9,400×3=28,200 9,400 \times 3 = 28,200 units.
5. For part (b), the purchase price is $5.15 \$5.15 per unit, and the quantity purchased and used is 28,000 units.

STEP 2

1. Calculate the Total Materials Variance.
2. Calculate the Materials Price Variance.
3. Calculate the Materials Quantity Variance.
4. Repeat steps 1-3 for the new conditions in part (b).

STEP 3

Calculate the Total Materials Variance using the formula:
Total Materials Variance=(Actual Quantity×Actual Price)−(Standard Quantity×Standard Price)\text{Total Materials Variance} = (\text{Actual Quantity} \times \text{Actual Price}) - (\text{Standard Quantity} \times \text{Standard Price})
Substitute the given values:
=(29,000×4.70)−(28,200×5.00)= (29,000 \times 4.70) - (28,200 \times 5.00)
Calculate:
=136,300−141,000=−4,700= 136,300 - 141,000 = -4,700

STEP 4

Calculate the Materials Price Variance using the formula:
Materials Price Variance=(Actual Price−Standard Price)×Actual Quantity\text{Materials Price Variance} = (\text{Actual Price} - \text{Standard Price}) \times \text{Actual Quantity}
Substitute the given values:
=(4.70−5.00)×29,000= (4.70 - 5.00) \times 29,000
Calculate:
=−0.30×29,000=−8,700= -0.30 \times 29,000 = -8,700

STEP 5

Calculate the Materials Quantity Variance using the formula:
Materials Quantity Variance=(Actual Quantity−Standard Quantity)×Standard Price\text{Materials Quantity Variance} = (\text{Actual Quantity} - \text{Standard Quantity}) \times \text{Standard Price}
Substitute the given values:
=(29,000−28,200)×5.00= (29,000 - 28,200) \times 5.00
Calculate:
=800×5.00=4,000= 800 \times 5.00 = 4,000

STEP 6

For part (b), calculate the Total Materials Variance using the new conditions:
Total Materials Variance=(28,000×5.15)−(28,200×5.00)\text{Total Materials Variance} = (28,000 \times 5.15) - (28,200 \times 5.00)
Calculate:
=144,200−141,000=3,200= 144,200 - 141,000 = 3,200

STEP 7

Calculate the Materials Price Variance for part (b):
Materials Price Variance=(5.15−5.00)×28,000\text{Materials Price Variance} = (5.15 - 5.00) \times 28,000
Calculate:
=0.15×28,000=4,200= 0.15 \times 28,000 = 4,200

STEP 8

Calculate the Materials Quantity Variance for part (b):
Materials Quantity Variance=(28,000−28,200)×5.00\text{Materials Quantity Variance} = (28,000 - 28,200) \times 5.00
Calculate:
=−200×5.00=−1,000= -200 \times 5.00 = -1,000
The solutions are: (a) - Total materials variance: −4,700-4,700 - Materials price variance: −8,700-8,700 - Materials quantity variance: 4,0004,000
(b) - Total materials variance: 3,2003,200 - Materials price variance: 4,2004,200 - Materials quantity variance: −1,000-1,000

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