Direct Materials Variances

The following data relate to the direct materials cost for the production of 2,300 automobile tires:

Actual:	57,900 lbs. at $1.9 per lb.
Standard:	59,100 lbs. at $1.85 per lb.

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.

Direct Materials Price Variance	$fill in the blank 1	FavorableUnfavorable
Direct Materials Quantity Variance	$fill in the blank 3	FavorableUnfavorable
Total Direct Materials Cost Variance	$fill in the blank 5	FavorableUnfavorable

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

Plant ManagerPurchasing Department

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

Purchasing DepartmentProduction 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 DepartmentProduction Supervisor

.

3. EX.23.05

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Direct Materials Variances

De Soto Inc. produces tablet computers. The company uses Thin Film Crystal (TFC) LCD displays for its products. Each tablet uses one display. The company produced 770 tablets during July. However, due to LCD defects, the company actually used 800 LCD displays during July. Each display has a standard cost of $12.50. Eight hundred LCD displays were purchased for July production at a cost of $9,400.

Determine the price variance, quantity variance, and total direct materials cost variance for July.

Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Price variance	$fill in the blank 1	FavorableUnfavorable
Quantity variance	$fill in the blank 3	FavorableUnfavorable
Total direct materials cost variance	$fill in the blank 5	FavorableUnfavorable