Undem's materials quantity variance for the current month was exactly one-half of its materials price variance. Both variances were unfavorable. The company's cost accountant has supplied the following standard cost information.
Standard price per pound of materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20
Actual pounds purchased and used during the month . . . . . . . . . . . . . . . . . . . . . . 1,600 pounds
Actual cost per pound of materials purchased and used . . . . . . . . . . . . . . . . . . . . . . . . . . . . $22
Actual units manufactured during the month . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 950 units
Normal productive output per month . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 975 units
Instructions
a. Compute Undem's materials price variance.
b. Compute the standard quantity of materials allowed for producing 950 units of product.
c. Record the journal entry to charge work in process for the cost of materials used during the month.
d. Assume Undem's overhead volume variance is five times the amount of its materials quantity variance. Is the volume variance favorable or unfavorable? How do you know?