MBAI Co. uses a standard costing system in connection with the manufacture of their product "X". Each unit of finished product contains 2 yards of a direct material. However, a 20% direct material spoilage calculated on input quantities occurs during the manufacturing process. The standard cost of direct material is P3 per yard. For the month, the company purchase 100,000 yards of the direct material for P350,000 and used 90,000 yards to produce 40,000 units of Material X. 

 

REQUIREMENTS:

1. Compute for the price variance.
2. Compute for the efficiency variance
3. Compute for the materials variance

Answer rating: 100% (QA)

To calculate the variances in the material costs for MBAI Co we need to first determine the standard ... View the full answer