The following materials standards have been established for a particular product:
standard quantity per unit of output 6.0 meters
standard price $ 18.30 per meter
the following data pertain to operations concerning the product for the last month:
actual materials purchased 9,700 meters
actual cost of materials purchased $ 185,270
actual materials used in production 9,200 meters
actual output 1,510 units
a. what is the materials price variance for the month? b. what is the materials quantity variance for the month?

a. Material Price Variance = $7,360 Unfavorable

b. Material Quantity Variance = $2,562 Unfavorable

Explanation:

We have,

Material Price Variance = ( Standard Price - Actual Price) Actual Quantity.

Here Standard Price per unit = $18.30 per meter

Actual Price = $185,270/9,700 = $19.10 per meter

Actual quantity used is to be considered. = 9,200

Not the quantity purchased.

Therefore, Material Price Variance = ($18.30 - $19.10) 9,200 = - $7,360. Since value is negative it is unfavorable as standard price is less than actual.

Material Quantity Variance = (Standard Quantity - Actual quantity) Standard Price

Standard Quantity for Actual Output = 1,510 6 = 9,060 meter

Actual Quantity used = 9,200 meters

Therefore Material Quantity Variance = ( 9,060 - 9,200 ) $18.30 = - $2,562

Since value is negative it is unfavorable as actual quantity used is higher than standard quantity.

Therefore, we have

a. Material Price Variance = $7,360 Unfavorable

b. Material Quantity Variance = $2,562 Unfavorable

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