Calculating the Direct Materials Price Variance and the Direct Materials Usage Variance Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 20 minutes and 6.4 quarts of oil are used. In June, Guillermo's Oil and Lube had 900 oil changes. Guillermo's Oil and Lube Company provided the following information for the production of oil changes during the month of June: Actual number of oil changes performed: 900 Actual number of quarts of oil used: 6,760 quarts Actual price paid per quart of oil: $5.20 Standard price per quart of oil: $5.10 Required: 1. Calculate the direct materials price variance (MPV) and the direct materials usage variance (MUV) for June using the formula approach. If required, round your answers to the nearest cent. MPV $fill in the blank Unfavorable MUV $fill in the blank Unfavorable 2. Calculate the total direct materials variance for oil for June. If required, round your answer to the nearest cent. $fill in the blank Unfavorable
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Calculating the Direct Materials Price Variance and the Direct Materials Usage Variance
Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 20 minutes and 6.4 quarts of oil are used. In June, Guillermo's Oil and Lube had 900 oil changes.
Guillermo's Oil and Lube Company provided the following information for the production of oil changes during the month of June:
Actual number of oil changes performed: 900
Actual number of quarts of oil used: 6,760 quarts
Actual price paid per quart of oil: $5.20
Standard price per quart of oil: $5.10
Required:
1. Calculate the direct materials price variance (MPV) and the direct materials usage variance (MUV) for June using the formula approach. If required, round your answers to the nearest cent.
| MPV | $fill in the blank | Unfavorable |
| MUV | $fill in the blank | Unfavorable |
2. Calculate the total direct materials variance for oil for June. If required, round your answer to the nearest cent.
$fill in the blank Unfavorable
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