A company bought 45,025 pounds of plastic pellets to make DVDs at a cost of $9,990. The standard cost per pound for the pellets is 20.3 cents. Some of these pellets were used in three jobs. The first job called for 7,500 pounds but used 7,250 pounds. The second job called for 8,800 pounds but used 9,000 pounds. The third job called for 2,300 pounds but used 2,250 pounds. Compute the direct materials price variance and the direct materials quantity variance for each job and in total. Why would you want to calculate the direct materials quantity variance for each job?
A company bought 45,025 pounds of plastic pellets to make DVDs at a cost of $9,990. The standard cost per pound for the pellets is 20.3 cents. Some of these pellets were used in three jobs. The first job called for 7,500 pounds but used 7,250 pounds. The second job called for 8,800 pounds but used 9,000 pounds. The third job called for 2,300 pounds but used 2,250 pounds. Compute the direct materials price variance and the direct materials quantity variance for each job and in total. Why would you want to calculate the direct materials quantity variance for each job?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A company bought 45,025 pounds of plastic pellets to make DVDs at a cost of $9,990. The standard cost per pound for the pellets is 20.3 cents. Some of these pellets were used in three jobs. The first job called for 7,500 pounds but used 7,250 pounds. The second job called for 8,800 pounds but used 9,000 pounds. The third job called for 2,300 pounds but used 2,250 pounds. Compute the direct materials price variance and the direct materials quantity variance for each job and in total. Why would you want to calculate the direct materials quantity variance for each job?
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