Materials Variances During the first month of the year, Boise plant produced 92,
ID: 2480806 • Letter: M
Question
Materials Variances
During the first month of the year, Boise plant produced 92,000 belts. Actual leather purchased was 283,500 strips at $3.60 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 78,900 hours at $15.50 per hour.
Required:
Break down the total variance for materials into a price variance and a usage variance using the columnar and formula approaches. If required, enter favorable values as negative numbers.
Price variance $ SelectFavorableUnfavorableItem 2 Usage variance $ SelectFavorableUnfavorableItem 4 Total variance $ SelectFavorableUnfavorableItem 6Explanation / Answer
A) Materials price variance = (Actual price - Standard Price) *Actual Quantity
Materials price variance = (3.60-4)*283500
Materials price variance = $ 113400 Favorable
B). Materials usage/quantity variance = (Actual Quantity Used- Standard Quantity)Standard Price
Materials usage/quantity variance = (283500 - 3*92000)*4
Materials usage/quantity variance = $ 30000 Unfavorable
C) Total Materials variance = ( Actual price*Actual Quantity - Standard Price*Standard Quantity)
Total Materials variance = (283500*3.60 - 4*92000*3)
Total Materials variance = $ 83400 Favorable