Direct Materials VariancesThe following data relate to the direct materials cost for the production of 1,800 automobile tires:Actual:56,600 lbs. at $1.8 per lb.Standard:54,900 lbs. at $1.85 per lb.a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and anunfavorable variance as a positive number.Direct Materials Price Variance$Direct Materials Quantity VarianceTotal Direct Materials Cost Variance$b. The direct materials price variance should normally be reported to theWhen lower amounts of direct materials are used because of production efficiencies, the variance would bereported to theWhen the favorable use of raw materials is caused by the purchase of higher-quality raw materials, the variance should be reported to the

Compute direct material price variance.

Answered: Direct Materials Variances The…

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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Schematize pertormance analysis and comment on variances. Following is the data of a manufacturing concern. From the figures given below, calculate: () Materials Cost Variance (W) Material Price Varlance (H) Material Usage Variance Product X During a particular period 160 tons of output was undertaken. The standard price per unit of materials is $20. The materials required for actual production were 4,000 units. An amount of $16,000 was spent on purchasing the materlals. The standard quantity of materials requlred for producing one fon of output is 120 units. Product Y The standard quantity of materlals required for producing one ton of output is 240 unils. The standard price per unit of materials is $24. During a porticular period d40 fons of production were 24.000 units. An amount of $48.000 was spent on purchasing the materials output was undertaken. The materials required for octual
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Direct Materials Variances The following data relate to the direct materials cost for the production of 2,300 automobile tires: Actual: 50,800 Ib. at $2.05 Standard: 49,300 Ib. at $2.10 a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Price variance Favorable Quantity variance Unfavorable Total direct materials cost variance Unfavorable b. The direct materials price variance should normally be reported to the Purchasing Department V. If lower amounts of direct materials had been used because of production efficiencies, the variance would be reported to the Production Supervisor - V. If the favorable use of raw materials had been caused by the purchase of higher-quality raw materials, the variance should be reported to the Purchasing Department
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Material price variance = (Standard price per gram - Actual price per gram) * Actual quantity of material used = (P5 - P6) * 14000 = P14,000 (Unfavourable) Material efficiency variance = (Standard quantity of materials - Actual material quantity used) * Standard price per gram = (12000 - 14000) * 5 = P10,000 (Unfavourable) Total materials cost variance = Materials price variance + Materials efficiency variance = (P14,000) + (P10,000) = P24,000 (Unfavourable) For Direct labour, Standard labour hours allowed for actual production = Actual units produced * Standard hours per unit = 2000 units * 1.8 hours = 3600 hours Direct labour rate variance = (Standard labour rate - Actual labour rate) * Actual labour hours used = (P100 - P97.5) * 4000 = P10,000 (Favourable) Direct labour efficiency variance = (Standard labour hours - Actual labour hours) * Standard labour rate = (3600 - 4000) * 100 = P40,000 (Unfavourable) Total direct labour cost variance = Direct labour rate variance + Direct…
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The following data relate to the direct materials cost for the production of 1,800 automobile tires: Actual: 60,900 lb. at $1.70 Standard: 59,100 lb. at $1.75 a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Price variance $fill in the blank 1 Quantity variance $fill in the blank 3 Total direct materials cost variance $fill in the blank 5
Direct Materials Variances The following data relate to the direct materials cost for the production of 2,500 automobile tires: Actual: 51,100 lbs. at $1.75 per lb. Standard: 49,600 lbs. at $1.8 per lb. a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Direct Materials Price Variance $fill in the blank 1 Direct Materials Quantity Variance $fill in the blank 3 Total Direct Materials Cost Variance $fill in the blank 5 b. The direct materials price variance should normally be reported to the . If lower amounts of direct materials had been used because of production efficiencies, the variance would be reported to the . If the favorable use of raw materials had been caused by the purchase of higher-quality raw materials, the variance should be reported to the .
Direct Labor Variances The following data relate to labor cost for production of 4,800 cellular telephones: Actual: 3,230 hrs. at $16.30 Standard: 3,180 hrs. at $16.60 a. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Rate variance Time variance $1 Total direct labor cost variance $ b. The employees may have been less-experienced or poorly trained, thereby resulting in a labor rate than planned. The lower level of experience or training may have resulted in efficient performance. Thus, the actual time required was than standard.
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