Direct Materials Variances

The following data relate to the direct materials cost for the production of 10,000 automobile tires:

Actual:	145,000 lbs. at $2.80 per lb.
Standard:	150,000 lbs. at $2.75 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.

Price variance	$	Unfavorable
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 .