Chapter 23, Problem 13E

To determine

Direct Material Price Variance:

The variance which is caused by the difference between the actual price per unit incurred and the expected price per unit to be incurred on the direct material is called the direct material price variance.

Direct Material Quantity Variance:

At the standard price, the difference between the actual quantity and standard quantity is termed as direct material quantity variance. The quantity variance measures the efficiency of management in utilizing the direct material for the production.

To determine:

1. Computation of direct materials price and quantity variances and determine as favorable or unfavorable.

2. Interpretation of the variances.