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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Use the following information to complete Brief Exercises 10-34 and 10-35:

Young Inc. produces plastic bottles. Production of 16-ounce bottles has a standard unit quantity of 0.45 ounce of plastic per bottle. During the month of June, 240,000 bottles were produced using 110,000 ounces of plastic. The actual cost of plastic was $0,042 per ounce, and the standard price was $0,045 per ounce. There is no beginning or ending inventories of plastic.

10-34 Total Materials Variance

Refer to the information for Young Inc. above.

Required:

Calculate the total variance for plastic for the month of June

To determine

Compute total variance for plastic for the month of June.

Explanation

Total Variance for Materials:

The total variance for materials can be stated as the difference between the cost incurred in actual and the material cost allowed for the production.

Using the following formula for calculating the total variance for materials:

Total  Material Variance= Actual Cost Planned Cost=(AP×AQ)(SP×SQ)

Substitute $187,500 for actual cost and $169,200 for planned cost in the above formula.

Total Material Variance=$4,6201$4,8602=$240 F

Therefore, the amount of total variance for the month of June is $240 F

Working Notes:

1

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