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Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
ISBN: 9781285866307

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BuyFindarrow_forward

Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
ISBN: 9781285866307
Textbook Problem

Direct materials variances

Dvorak Company produces a product that requires five standard pounds per unit. The standard price is $2.50 per pound. If 1,000 units required 4,500 pounds, which were purchased at $3.00 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance?

(a)

To determine

Direct material variances:

The difference between the actual material cost per unit and the standard material cost per unit for the direct material purchased is known as direct material cost variance. The direct material variance can be classified as follows:

  • Direct materials price variance
  • Direct materials quantity variance

To determine: The direct materials price variance.

Explanation

The direct materials price variance is determined as follows:

Direct materials price variance = [(Actual priceStandard price)× Actual quantity]=[($3

(b)

To determine
The direct materials quantity variance.

(c)

To determine
The total direct materials cost variance.

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