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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?

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Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207

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Chapter
Section
BuyFindarrow_forward

Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207
Chapter 22, Problem 22.4EX
Textbook Problem
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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?

(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 of Solution

The direct materials price variance is determined as follows:

Direct materials price variance = [(Actual priceStandard price)× Actual quantity]=[($2

(B)

To determine
The variances for analysis and control should be reported for which department.

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Chapter 22 Solutions

Financial & Managerial Accounting
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