Direct Materials Variances Bellingham Company produces a pro

Direct Materials Variances

Bellingham Company produces a product that requires five standard pounds per unit. The standard price is $6 per pound. If 6,400 units used 31,400 pounds, which were purchased at $6.24 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) cost variance? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Solution

Answer:

a. Direct materials price variance

7536

unfavorable

b. Direct materials quantity variance

3936

favorable

c. Direct materials cost variance

3600

unfavorable

Working notes for the above answer is as under

1

Direct materials price variance

=(Actual Price- standard price) x Actual Quantity

=(6.24- 6) x 31400

=0.24x31400

=$7536 unfavorable

2

Direct materials quantity variance

=(actual Quantity- standard Quantity ) x standard price

=(31400 - (6400x5) ) x 6

=(31400-32000) x 6

=600x6

=$3600 favorable

3

Direct materials cost variance

= (standard Price x standard Quantity) – (actual Quantity x actual Price)

=(6*32000) - (31400*6.24)

=192000-195936               

=$3936 unfavorable