Jay Enterprises reports the following information regarding the production of on
ID: 2497390 • Letter: J
Question
Jay Enterprises reports the following information regarding the production of one of its products for the month. Compute the direct materials cost variance, the direct materials price variance, the direct materials quantity variance and identify each as either favorable or unfavorable.
Direct materials standard (6 lbs. @ $3/lb.)
$18 per finished unit
Actual direct materials used
179,000 lbs.
Actual finished units produced
30,000 units
Actual cost of direct materials used
$554,900
Direct materials standard (6 lbs. @ $3/lb.)
$18 per finished unit
Actual direct materials used
179,000 lbs.
Actual finished units produced
30,000 units
Actual cost of direct materials used
$554,900
Explanation / Answer
solution :
direct material
Quantity
rate
total
180000
3
540,000
standard
179,000
3.10
554,900
actual
(554900/179000)
direct materials cost variance
(standard cost - actual cost)
(540000-554900)
- 14,900.00
unfavourable
direct materials price variance
(standard price-actual price)xactual quantity
(3-3.10)x179000
- 17,900.00
unfavourable
direct materials quantity variance
(standard quantity - actual quantity)xstandard price
(180000-179000)x3
3000
favourable
direct material
Quantity
rate
total
180000
3
540,000
standard
179,000
3.10
554,900
actual
(554900/179000)