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28 July, 14:46

The following materials standards have been established for a particular product: Standard quantity per unit of output Standard price 9.2 grams $14.70 per gram The following data pertain to operations concerning the product for the last month: Actual materials purchased ... Actual cost of materials purchased. Actual materials used in production ... Actual output 5,500 grams $76,450 5,100 grams 540 units The direct materials purchases variance is computed when the materials are purchased. Required: a. What is the materials price variance for the month? b. What is the materials quantity variance for the month?

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  1. 28 July, 16:21
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    Instructions are below.

    Explanation:

    Giving the following information:

    Standard quantity per unit = 9.2 grams

    Standard price = $14.70 per gram

    Actual materials purchased = 5,500 grams

    The actual cost of materials = $76,450

    Actual materials used in production = 5,100 grams

    Actual output = 540 units

    To calculate the direct material variances, we need to use the following formulas:

    Direct material price variance = (standard price - actual price) * actual quantity

    Actual price = 76,450/5,500 = $13.9

    Direct material price variance = (14.7 - 13.9) * 5,500 = $4,400 favorable

    Direct material quantity variance = (standard quantity - actual quantity) * standard price

    Standard quantity = 540*9.2 = 4,968 grams

    Direct material quantity variance = (4,968 - 5,100) * 14.7 = $1,940.4 unfavorable
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