The following standards have been established for a raw material used to make pr

Question

The following standards have been established for a raw material used to make product 084: Standard quantity of the material per unit of output standard price of the material 7.6 meters $ 18.80 per meter The following data pertain to a recent month's operations: Actual material purchased Actual cost of material purchased Actual material used in production Actual output 3,900 meters $76,830 3,600 meters 550 units of product 084 The direct materials purchases variance is computed when the materials are purchased. Required: a. What is the materials price variance for the month? b. What is the materials quantity variance for the month? a. Materials price variance b. Materials quantity variance

Explanation / Answer

a. Materials price variance = (AQ × AP) ? (AQ × SP)

= $76,830 ? (3,900 × $18.80) = $3,510 U

b. Materials quantity variance = SP(AQ ? SQ*)

= $18.80(3,600 ? 4,180) = $10,904 F

*SQ = Standard quantity per unit × Actual output = 7.6 × 550 = 4,180

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