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Direct Materials Variances Silicone Engine Inc. produces wrist-worn tablet computers. The company uses Thin Film Crystal (TFC) LCD displays for its products. Each tablet uses one display. The company produced 550 tablets during December. However, due to LCD defects, the company actually used 500 LCD displays during December. Each display has a standard cost of $6.40. LCD displays were purchased for December production at a cost of $2,950.
Determine the price variance, quantity variance, and total direct materials cost variance for December. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your per unit computations to nearest cent, if required.
Price variance $ Unfavorable/favorable
Favorable Quantity variance $ Unfavorable/favorable
Total direct materials cost variance $ Unfavorable/Favorable

Sagot :

Tundexi

Answer:

Standard price = $6.40

Actual price = $5.90 ($2,950/500)

Standard quantity = 550

Actual quantity = 500

Direct materials price variance = (Actual price - Standard price) * Actual quantity

= ($5.90 - $6.40) * 500

= $0.5 * 500

= $250 Favorable

Direct materials quantity variance = (Actual quantity - Standard quantity) * Standard price

= (500 - 550) * $6.40

= 50 * $6.40

= $320 Favorable

Total direct materials cost variance = Direct materials price variance + Direct materials quantity variance

= $250 Favorable + $320 Favorable

= $570 Favorable

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