Parker Plastic, Inc., manufactures plastic mats to use with rolling office chair
ID: 2580753 • Letter: P
Question
Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows Standard QuantityStandard Price (Rate) I3 sqft $.155 per sq. ft. 0.3 hr Standard Unit Cost 3.63 0.36 0.52 20.15 Direct materials(plastic) Direct labor $ 12.10 per hr $ 1.20 per hr Variable manufacturing overhead (based on 0.3 hr direct labor hours) Fixed manufacturing overhead $480480 924,000 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 1,180,000 12.100,000 5 18,150,000 322,000 3,799,600 S 1,200,000 $ 379,000 Required Calculate Parker Plastic's direct materials price and quantity variances. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable.) Direct Material Price Variance Direct Material Quantity VarianceExplanation / Answer
Denotations used: -
SP - Standard Price, SQ - Standard Quantity, AQ - Actual Quantity, AP - Actual Price
Calculation of Direct Material Price Variance
(SP – AP) x AQ
SP = $1.55 per Sq. ft
AP = Cost of plastic purchased and used/Number of Sq ft plastic used.
= 18,150,000/12,100,000
= $1.50 per Sq. ft
AQ = Number of Sq ft of plastic used/ Number of Units produced
= 12,100,000/1,180,000
= 10.25 Sq. ft.
Therefore Direct Material Price Variance is:
(SP – AP) x AQ
(1.55-1.50) X 10.25
= 0.5125 (F)
Calculation of Direct Material Quantity Variance
SP x (SQ – AQ)
SP = $1.55 per Sq. ft
SQ = 13 Sq. Ft.
AQ = 10.25 Sq. ft.
Therefore Direct Material Quantity Variance is:
SP x (SQ – AQ)
1.55 X (13-10.25)
= 4.2625 (F)