The following data relate to the direct materials cost for the production of 2,200 automobile tires: Actual:
Question:
The following data relate to the direct materials cost for the production of 2,200 automobile tires:
Actual: | 51,700 lbs. at $1.70 | $87,890 |
Standard: | 50,700 lbs. at $1.75 | $88,725 |
a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Price variance | $ | SelectFavorableUnfavorableItem 2 |
Quantity variance | $ | SelectFavorableUnfavorableItem 4 |
Total direct materials cost variance | $ | SelectFavorableUnfavorableItem 6 |
b. The direct materials price variance should normally be reported to the SelectPlant ManagerPurchasing DepartmentItem 7 . If lower amounts of direct materials had been used because of production efficiencies, the variance would be reported to the SelectPurchasing DepartmentProduction SupervisorItem 8 . If the favorable use of raw materials had been caused by the purchase of higher-quality raw materials, the variance should be reported to the SelectPurchasing DepartmentProduction SupervisorItem 9 .
Financial and Managerial Accounting
ISBN: 978-1285078571
12th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac