Marks Company makes one product, for which it has established the following standards for materials:Average quantity of material per unit of product: 4.5 poundsPrice per pound of materials: $16During March, Marks made 10,000 units of the product, using 50,000 pounds at a total purchase price of $825,000. Required:(a) Determine the total flexible budget materials variance and indicate whether it is favorable or unfavorable.(b) Calculate the materials price variance and indicate whether it is favorable or unfavorable.(c) Determine the materials usage variance and indicate whether it is favorable or unfavorable.
What will be an ideal response?
(a) Flexible budget materials variance:
| Actual cost for materials | $ | 825,000 | |
| Flexible budget amount | 720,000 | ||
| Flexible budget variance | $ | 105,000 | U |
(b) Materials price variance: 50,000 pounds × ($16.50 ? 16.00) = $25,000 unfavorable
(c) Materials usage variance: [(10,000 units × 4.5 pounds) ? 50,000 pounds] × $16 = $80,000 unfavorable
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