Parker Plastic, Inc., manufactures plastic mats to use with rolling office chair

Question

Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost infomation for last year follows: Standard Quantity Standard Slandard Price (Rale) $1050 per hr $150 per hr Unit Cost 2.73 0.39 0 34 $ 504 Direct materials (plastic) Direct labor Variable manufacturing overhead (based on 8 sqft063 per sq ft 0.26 hr 0.26 hr direct labor hours) Fixed manufacturing overhead $308,040- 906,000 units) Parker Plastic had the following actual results for the past year: Number of units produced and sold Number of square feet of plastic used Cost of plastic purchased and used Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 1,220,000 11,200,000 S 6,720,000 305,000 $ 3,233,000 $ 540,000 $361,000 Required: Calculate Parker Plastic's direct materials price and quantity variances. (Do not round intermediate calculations. Indicate the effect of each varlance by selecting "F" for favorable, "U" for unfavorable.) Direct Material Price Variance Direct Material Quantity Variance

Explanation / Answer

Direct material price variance = (0.63*11200000-6720000) = 336000 F

Direct material quantity variance = (1220000*8-11200000)*0.63 = 907200 U

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