Fantastic Feeder Products Inc. manufactures high-quality wooden cutting boards sold to restaurants and gourmet home cooks. One of these boards, the CertiPro II, requires an expensive hardwood. During a recent month, the company manufactured 1,200 CertiPro II cutting
boards using 540 metres of hardwood. The hardwood cost the company $2,970.
The company’s standards for one CertiPro II cutting board are 0.4 metres of hardwood, at
a cost of $5.00 per metre.
Required:
1. What cost for wood should have been incurred to make 1,200 CertiPro II cutting boards?
How much greater or less is this than the cost that was incurred?
2. Break down the difference computed in (1) above into a materials price variance and a
materials quantity variance.