Regent Corp. uses a standard cost system to account for the costs of its one product. Materials standards are 3 pounds of material at $14 per pound, and labor standards are 4 hours of labor at a standard wage rate of $11. During July Regent Corp. produced 3,300 units. Materials purchased and used totaled 10,100 pounds at a total cost of $142,650. Payroll totaled $146,780 for 13,150 hours worked. Calculate the:a. direct materials price variance.b. direct materials quantity variance.
What will be an ideal response?
a. $1,250 unfavorable = $142,650 - (10,100 × $14) = $142,650 - $141,400
b. $2,800 unfavorable = (10,100 × $14) - (3,300 × 3 × $14) = $141,400 - $138,600
Direct materials price variance = AQ × (SP - AP). Direct materials quantity variance = SP × (SQ - AQ).
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