Quality Cabinet Company uses a standard costing system and produced 2,080 cabine
ID: 2473462 • Letter: Q
Question
Quality Cabinet Company uses a standard costing system and produced 2,080 cabinets during May. The standard cost of wood is $23 per linear foot, and the standard quantity for each cabinet is 30 linear feet. During May, the company purchased 65,100 linear feet of wood for $1,367,100, and 63,800 feet were used in production. The company purchases all materials on account.
Quality Cabinet Company uses a standard costing system and produced 2,080 cabinets during May. The standard cost of wood is $23 per linear foot, and the standard quantity for each cabinet is 30 linear feet. During May, the company purchased 65,100 linear feet of wood for $1,367,100, and 63,800 feet were used in production. The company purchases all materials on account.
Explanation / Answer
Material price variance = Actual cost - [AQ *SR]
= [1367100*63800/65100] - [63800 * 23 ]
= 1339800- 1467400
= - 127600 F
Quantity variance = SR [AQ-SQ]
= 23 [ 63800 - (2080 * 30)]
= 23 [63800 - 62400]
= 32200 U
Total material variance = -127600 + 32200 =- 95400 f
No. Account title Debit credit 1 Raw material inventory 1,367,100 Accounts payable 1,367,100 [to record purchase ] 2 Work in process 1462500 Material variance 95400 Raw material inventory 1367100