Direct Materials Variances

The following data relate to the direct materials cost for the production of 2,500 automobile tires:

Actual:	59,100 lbs. at $1.95 per lb.
Standard:	60,900 lbs. at $1.90 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	$	Unfavorable
Direct Materials Quantity Variance	$	Favorable
Total Direct Materials Cost Variance	$	Favorable

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 .