The following materials standards have been established for a particular product:?Standard quantity per unit of output9.4pounds?Standard price$16.90per poundThe following data pertain to operations concerning the product for the last month:?Actual materials purchased7,300pounds?Actual cost of materials purchased$116,435??Actual materials used in production7,100pounds?Actual output740unitsThe direct materials purchases variance is computed when the materials are purchased.Required:a. What is the materials price variance for the month?b. What is the materials quantity variance for the month?
What will be an ideal response?
a. Materials price variance = (AQ × AP) ? (AQ × SP)
= $116,435 ? (7,300 pounds × $16.90 per pound)
= $116,435 ? $123,370
= $6,935 F
b. SQ = Standard quantity per unit × Actual output = 9.4 pounds per unit × 740 units = 6,956 pounds
Materials quantity variance = (AQ ? SQ) × SP
= (7,100 pounds ? 6,956 pounds) × $16.90 per pound
= (144 pounds) × $16.90 per pound
= $2,433.60 U
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