Regent Corp uses a standard cost system to account for the costs of its one prod
ID: 2560457 • Letter: R
Question
Regent Corp uses a standard cost system to account for the costs of its one product. Materials standards are 2.8 pounds of material at $13 per pound and 4 hours of labor at a standard wage rate of $11. During July Regent Corp produced 3,240 units. Materials purchased and used totaled 10,060 pounds at a total cost of $132,680. Payroll totaled $148,380 for 13,180 hours worked. a. Calculate the direct materials price variance. (Do not round your intermediate calculations. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).) Price Variance b. Calculate the direct materials quantity variance. (Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance).) Quantity VarianceExplanation / Answer
Answer:-
Material price variance = (Standard price – Actual price) * Actual quantity used
= ($13.00 per pound - $13.18887 per pound)*10060 pounds used
= $1900 Unfavourable
Material Quantity variance = (Standard Quantity- Actual Quantity)*Standard price
=(9072 pounds – 10060 pounds)*$13.00 per pound
= $12844 Unfavourable
Where:-
Standard quantity = Pounds of material per unit*Actual Production
=2.80 pounds of material per unit*3300 unit = 9240 pounds
Actual rate per unit =Actual cost/Actual material used
=$132680/10060 pounds =$13.18887 per unit
Explanation:-
Material cost variance = Standard cost – Actual cost
=$117936 – $132680 = $14744 Unfavourable
Where:-
Standard cost = Price per pound* Pounds of material per unit *Actual Production
=$13.00*2.80 Pounds of material per unit *3240 units
= $117936
Actual cost = $132680
Material cost variance = Material price variance +Material quantity variance
$14744 Unfavourable =$1900 Unfavourable+$12844 Unfavourable