The standard cost of Product B manufactured by Pharrell Company includes 3.6 units of direct materials at $5.90 per unit. During June, 26,600 units of direct materials are purchased at a cost of $5.65 per unit, and 26,600 units of direct materials are used to produce 7,300 units of Product B. (a) Compute the total materials variance and the price and quantity variances.

Results are below.

Explanation:

To calculate the direct material price and quantity variance, we need to use the following formulas:

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

Direct material price variance= (5.9 - 5.65)*26,600

Direct material price variance= $6,650 favorable

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

Direct material quantity variance= (7,300*3.6 - 26,600)*5.9

Direct material quantity variance= $1,888 unfavorable

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