**Exercise 17-19 (Algo) Variable Cost Variances: Materials Purchased and Materials Used Are Not Equal (LO 17-2)**Gates Corporation reported the following information concerning its direct materials:- **Direct materials purchased (actual):** $679,000- **Standard cost of materials purchased:** $707,000- **Actual product cost: total amount of materials used:** $450,000- **Standard direct materials cost per unit produced:** $1.80- **Units produced:** 23,200**Required:**Compute the direct materials cost variances. **Indicate the effect of each variance by selecting "F" for favorable or "U" for unfavorable.** If there is no effect, do not select either option.**Direct Materials Variance Table:**| Direct Materials | ||-------------------------|-------|| Price variance | || Efficiency variance | || Total direct materials cost variance | |(Note: Fill in the table with appropriate calculations and identify the variances as favorable or unfavorable.)

Purchase Computations: Actual costs = $679,000 Actual inputs at standard price = $700,000 Price variance = ($700,000– $679,000) = $21,000 F Usage Computations: Actual inputs at standard price = $450,000 Flexible budget (Standard Allowed for Good Output) = $18.8× 23,200 = $436,160 Efficiency variance = ($436,160– $450,000) = $13,840 U Price variance = $21,000 F Efficiency variance = $13,840 U Direct materials cost variances = $21,000 F – $13,840 U = $7160 F

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Sates Corporation reported the following information concerning its direct materials. Direct materials purchased (actual) standard cost of materials purchased standard price times actual amount of materials used Actual production standard direct materials costs per unit produced $679, 000 $700, 000 $450, 000 23, 200 units $4 18.8 Required: Compute the direct materials cost variances. (Indlcate the effect of each varlance by selecting "F unfavorable. If there is o effect, do not select elther optlon.) Direct Materials Price variance Efficiency variance Total direct materials cost variance

Sates Corporation reported the following information concerning its direct materials. Direct materials purchased (actual) standard cost of materials purchased standard price times actual amount of materials used Actual production standard direct materials costs per unit produced $679, 000 $700, 000 $450, 000 23, 200 units $4 18.8 Required: Compute the direct materials cost variances. (Indlcate the effect of each varlance by selecting "F unfavorable. If there is o effect, do not select elther optlon.) Direct Materials Price variance Efficiency variance Total direct materials cost variance

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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