Bailey's materials quantity variance for the current month was exactly one-half of its materials price variance. Both variances were unfavorable. The company's cost accountant has supplied the following standard cost information: Standard price per pound of materials Actual pounds purchased and used during the month Actual cost per pound of materials purchased and used Actual units manufactured during the month Normal productive output per month $20 1,000 pounds $ 25 700 units 800 units Required: a. Compute Bailey's materials price variance. b. Compute the standard quantity of materials allowed for producing 700 units of product. c. Record the journal entry to charge Work in Process for the cost of materials used during the month.
Bailey's materials quantity variance for the current month was exactly one-half of its materials price variance. Both variances were unfavorable. The company's cost accountant has supplied the following standard cost information: Standard price per pound of materials Actual pounds purchased and used during the month Actual cost per pound of materials purchased and used Actual units manufactured during the month Normal productive output per month $20 1,000 pounds $ 25 700 units 800 units Required: a. Compute Bailey's materials price variance. b. Compute the standard quantity of materials allowed for producing 700 units of product. c. Record the journal entry to charge Work in Process for the cost of materials used during the month.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Bailey's materials quantity variance for the current month was exactly one-half of its materials price variance. Both variances were
unfavorable. The company's cost accountant has supplied the following standard cost information:
Standard price per pound of materials
Actual pounds purchased and used during the month
Actual cost per pound of materials purchased and used
Actual units manufactured during the month
Normal productive output per month
$ 20
1,000 pounds
$25
700 units
800 units
Required:
a. Compute Bailey's materials price variance.
b. Compute the standard quantity of materials allowed for producing 700 units of product.
c. Record the journal entry to charge Work in Process for the cost of materials used during the month.
d-1. Assume Bailey's overhead volume variance is four times the amount of its materials quantity variance. Compute Bailey's volume
variance.
d-2. How do you know if Bailey's volume variance is favorable or unfavorable?
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