The following standards have been established for a raw material used to make product O84: Standard quantity of the material per unit of output 7.1metersStandard price of the material$18.30per meter?The following data pertain to a recent month's operations: Actual material purchased 3,400metersActual cost of material purchased$64,090 Actual material used in production 3,100metersActual output 500units of product O84?The 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)
= $64,090 ? (3,400 meters × $18.30 per meter)
= $64,090 ? $62,220
= $1,870 U
b.
SQ = Standard quantity per unit × Actual output = 7.1 meters per unit × 500 units = 3,550 meters
Materials quantity variance = (AQ ? SQ) × SP
= (3,100 meters ? 3,550 meters) × $18.30 per meter
= -440 meters × $18.30 per meter
= $8,235 F
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