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Direct materials variances The following data relate to the direct materials cost for the production of 10,000 automobile tires: Actual: 145,000 lbs. at $2.80 per lb. Standard: 150,000 lbs. at $2.75 per lb. A. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. B. To whom should the variances he reported for analysis and control?
Financial & Managerial Accounting
Solutions
Financial & Managerial Accounting
Direct materials variances
The following data relate to the direct materials cost for the production of 10,000 automobile tires:
| Actual: | 145,000 lbs. at $2.80 per lb. |
| Standard: | 150,000 lbs. at $2.75 per lb. |
- A. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance.
- B. To whom should the variances he reported for analysis and control?
(A)
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 of Solution
The direct materials price variance is determined as follows:
(B)
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