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(a) Compute the total materials variance and the price and quantity variances. Total materials variance Materials price variance $ b) $ Materials quantity variance $ 3370 i 6725 i 3355 i Favorable Favorable Unfavorable Compute the total materials variance and the price and quantity variances, assuming the purchase price is $6.15 and the quantity purchased and used is 26,800 units.

(a) Compute the total materials variance and the price and quantity variances. Total materials variance Materials price variance $ b) $ Materials quantity variance $ 3370 i 6725 i 3355 i Favorable Favorable Unfavorable Compute the total materials variance and the price and quantity variances, assuming the purchase price is $6.15 and the quantity purchased and used is 26,800 units.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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help with material quantities variance. thanks

### Materials Variance Analysis for Product B **Background:** The Pharrell Company manufactures Product B using 3.1 units of direct materials, each costing $6.10. In June, a total of 26,900 units were purchased at $5.85 per unit, with the same amount used to produce 8,500 units of Product B. #### (a) Initial Computation of Variances - **Total Materials Variance:** - **Amount:** $3,370 - **Classification:** Favorable - **Materials Price Variance:** - **Amount:** $6,725 - **Classification:** Favorable - **Materials Quantity Variance:** - **Amount:** $3,355 - **Classification:** Unfavorable #### (b) Alternative Scenario with Adjusted Price and Quantity Assuming the purchase price of materials is $6.15, with a bought and used quantity of 26,800 units: - **Total Materials Variance:** - **Amount:** $4,085 - **Classification:** Unfavorable - **Materials Price Variance:** - **Amount:** $1,340 - **Classification:** Unfavorable - **Materials Quantity Variance:** - **(Amount to be computed)** - **Classification:** Unfavorable #### Explanation: - **Total Materials Variance** measures the overall cost effect of purchasing and using materials, comparing actual costs to standard costs. - **Materials Price Variance** indicates whether the cost of materials purchased is higher or lower than expected. - **Materials Quantity Variance** shows whether the actual amount of materials used differs from what was expected for the units produced. Understanding these variances helps in making informed production and purchasing decisions, improving cost control.
Transcribed Image Text:### Materials Variance Analysis for Product B **Background:** The Pharrell Company manufactures Product B using 3.1 units of direct materials, each costing $6.10. In June, a total of 26,900 units were purchased at $5.85 per unit, with the same amount used to produce 8,500 units of Product B. #### (a) Initial Computation of Variances - **Total Materials Variance:** - **Amount:** $3,370 - **Classification:** Favorable - **Materials Price Variance:** - **Amount:** $6,725 - **Classification:** Favorable - **Materials Quantity Variance:** - **Amount:** $3,355 - **Classification:** Unfavorable #### (b) Alternative Scenario with Adjusted Price and Quantity Assuming the purchase price of materials is $6.15, with a bought and used quantity of 26,800 units: - **Total Materials Variance:** - **Amount:** $4,085 - **Classification:** Unfavorable - **Materials Price Variance:** - **Amount:** $1,340 - **Classification:** Unfavorable - **Materials Quantity Variance:** - **(Amount to be computed)** - **Classification:** Unfavorable #### Explanation: - **Total Materials Variance** measures the overall cost effect of purchasing and using materials, comparing actual costs to standard costs. - **Materials Price Variance** indicates whether the cost of materials purchased is higher or lower than expected. - **Materials Quantity Variance** shows whether the actual amount of materials used differs from what was expected for the units produced. Understanding these variances helps in making informed production and purchasing decisions, improving cost control.
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