Direct Materials VariancesThe following data relate to the direct materials cost for the production of 2,300 automobile tires:Actual:59,100 lbs. at $1.85 per lb. Standard:60,900 lbs. at $1.90 per lb. a.  Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.Direct Materials Price Variance$ Direct Materials Quantity Variance$ Total Direct Materials Cost Variance$ b.  The direct materials price variance should normally be reported to the  . When lower amounts of direct materials are used because of production efficiencies, the variance would be reported to the  . When the favorable use of raw materials is caused by the purchase of higher-quality raw materials, the variance should be reported to the  .

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Asked Dec 9, 2019
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Direct Materials Variances

The following data relate to the direct materials cost for the production of 2,300 automobile tires:

Actual: 59,100 lbs. at $1.85 per lb.  
Standard: 60,900 lbs. at $1.90 per lb.  

a.  Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Direct Materials Price Variance $  
Direct Materials Quantity Variance $  
Total Direct Materials Cost Variance $  

b.  The direct materials price variance should normally be reported to the  . When lower amounts of direct materials are used because of production efficiencies, the variance would be reported to the  . When the favorable use of raw materials is caused by the purchase of higher-quality raw materials, the variance should be reported to the  .

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Expert Answer

Step 1

a.  Calculation of direct material price variance, direct material quantity variance and direct material cost variance:

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Direct Material = Actual Quantity x (Standard Rate - Actual Rate) Price Variance = 59,100 lbs. x ($1.85 per lb.–$1.90 per lb.) = 59,100 lbs. x (S0.05 per lb.) =-$2,955 Favorable Direct Material = Standard Rate x (Actual Quantity -Standard Quantity) Quantity Variance = $1.90 per lb.x(59,100 lbs. – 60,900 lbs.) = $1.90 per lb.x(1,800 lbs.) = -S3, 420 Favorable Direct Material = Actual Cost – Standard Cost Cost Variance ((Actual Quantity x Actual Rate) Direct Material) (Standard Quantity x Standard Rate) Cost Variance = {(59,100 lbs.x$1.85) -(60,900 lbs.x $1.90)} = $109,335 – $115,170 –S8, 835 Favorable

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Step 2

Therefore...

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Direct Material Price Variance Direct Material Quantity Variance Direct Material Cost Variance -$2,955 -$3,420 -$8.835 Favorable Favorable Favorable

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