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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

Required:
a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance.

Direct Materials Price Variance __________ $
Direct Materials Quantity Variance __________ $
Total Direct Materials Cost Variance __________ $

b. The direct materials price variance should normally be reported to the __________ . When lower amounts of direct materials are used because of production efficiencies, the variance would be reported to the__________. When the favorable use of raw materials is caused by the purchase of higher-quality raw materials, the variance should be reported to the__________.

Sagot :

batolisis

Answer:

A) - $2585  

    $1750

    -$835

B) Purchasing department , Purchasing supervisor , purchasing department

Explanation:

A) calculations for direct material price variance , quantity variance and total direct materials cost variance

Direct material price variance = 51,700 * ( 1.7 - 1.75 ) = -$2585.

Direct material Quantity variance = 1.75 ( 51700 - 50700 ) = $1750  

Total direct materials Cost variance = 87890 - 88725 = - $835  a

B)

The direct materials price variance should normally be reported to the Purchasing department.

When lower amounts of direct materials are used because of production efficiencies, the variance would be reported to the production supervisor

When the favorable use of raw materials is caused by the purchase of higher-quality raw materials, the variance should be reported to the Purchasing department

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