Required: What are the direct materials price variance, the direct materials quantity variance, and the total direct materials cost variance? If they bought 10,000 connectors costing $310, what
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Ed Co. manufactures two types of O rings, large and small. Both rings use the same material but require different amounts. Standard materials for both are shown.
Large Small
rubber 3 feet at $0.25 per foot 1.25 feet at $0.25 per foot
connector 1 at $0.03 1 at $0.03
At the beginning of the month, Ed Co. bought 25,000 feet of rubber for $6,875. The company made 3,000 large O rings and 4,000 small O rings. The company used 14,500 feet of rubber.
Required:
What are the direct materials price variance, the direct materials quantity variance, and the total direct materials cost variance?
If they bought 10,000 connectors costing $310, what would the direct materials price variance be for the connectors?
If there was an unfavorable direct materials price variance of $125, how much did they pay per foot for the rubber?
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