Direct Materials Variances

The following data relate to the direct materials cost for the production of 2,100 automobile tires:

Actual:	59,200 lbs. at $2	$118,400
Standard:	60,400 lbs. at $2.05	$123,820

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	$	Favorable
Quantity variance	$	Favorable
Total direct materials cost variance	$	Favorable

b. The direct materials price variance should normally be reported to the Purchasing Department . If lower amounts of direct materials had been used because of production efficiencies, the variance would be reported to the Production Supervisor . 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 Purchasing Department .