Torres Company produces fruit juices, sold in litres. Recently, the company adop

Question

Torres Company produces fruit juices, sold in litres. Recently, the company adopted the following material standard for one litre OF its apple juice: Direct materials (128 grams @ $0.05) $6.40 During the first week of operation, the company experienced the following results: a. Litre units produced: 20,000 b. Grams of materials purchased and used: 2.600,000 grams at $0.06 c. No beginning Of ending inventories of raw materials This variance is (F/U) Total Material Variance is $ Total Material Price Variance is $ Total Usage Variance is $ This variance is (F/U) This variance is (F/U)

Explanation / Answer

As per policy first question will be answered completely

Materials price variance = AQ * (AP-SP) = 2600000*(0.06-0.05) = 26000 Unfavorable

Materials usage variance = SP * (AQ-SQ) = 0.05*(2600000-(128*20000) = 2000 Unfavorable

Total materials variable = materials price variance + materials usage variance = 26000 Unfavorable + 2000 Unfavorable = 28000 Unfavorable

Therefore

Total material variance is $28,000. This variance is U

Total material price variance is $26000. This variance is U

Total material usage variance is $2000. This variance is U.

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