Bellingham Company produces a product that requires 5 standa

Bellingham Company produces a product that requires 5 standard pounds per unit. The standard price is $11 per pound. If 4,600 units required 23,500 pounds, which were purchased at $10.67 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) 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.

Solution

Material price variance = (11-10.67)*23500 = -7755 Favorable

Material quantity variance = (4600*5-23500)*11 = 5500 Unfavorable

Material cost variance = (4600*5*11)-(23500*10.67) = -2255 Favorable