Patriot Company produces flak jackets for military use. The company recently ado

Question

Patriot Company produces flak jackets for military use. The company recently adopted a standard costing system and set the following standards for materials per unit of product: Materials (Ballistic Nylon): 8 yards@ $4 per yard During the most recent month, Patriot produced 5,500 units of flak jackets. Actual materials purchased and used were 40,000 yards at the price of $4.20 per yard. Based on the information above, answer the following questions: L 5 points] (1) What was the total material costs incurred by the company during the month (i.e, actual costs of materials)? (2) What should be the total material costs allowed for the production during the month (i.e., standard costs of materials)? (3) What is the total variance for materials to be reported during the month? Is it favorable (F) or unfavorable (U)? materials price and quantity (usage) variances below. Indicate whether each variance is favorable (F or unfavorable (U (4) Using either the template (columnar) approach or the formula approach, compute direct

Explanation / Answer

1) Total cost of material incurred by the company = Actual cost Actual Cost = 40,000 yards x $4.20 per yard $168,000.00 2) Total material cost allowed for the production = Standard Cost Standard Cost = 5500 units x 8 yards x $4 per yard = $176,000.00 3) Total Variance = Actual Cost - Standard Cost Total Material Variance = $168,000 - $176,000 $8,000.00 Favorable 4) Materials price variance = (AQ x AP) - (AQ - SP) Materials price variance = (40,000 x $4.20) - (40,000 x $4) $8,000.00 Unfavorable Materials quantity variance = (AQ x SP) - (SQ x SP) Materials quantity variance = (40,000 x $4) - (44,000 x $4) $16,000.00 Favorable Total materials variance = (AQ x AP) - (SQ x SP) Total materials variance = (40,000 x $4.20) - (44,000 x $4) $8,000.00 Favorable Total material Variance = Material price variance + Material quantity variance Total Material Variance = $8000 UF + $16000 F $8,000.00 Favorable

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