Exercise 26-05

The standard cost of Product B manufactured by Pharrell Company includes2.6units of direct materials at $5.30per unit. During June,27,400units of direct materials are purchased at a cost of $5.05per unit, and27,400units of direct materials are used to produce10,400units of Product B.

(a)

Compute the total materials variance and the price and quantity variances.

Total materials variance$

UnfavorableNeither favorable nor unfavorableFavorable

Materials price variance$

Neither favorable nor unfavorableUnfavorableFavorable

Materials quantity variance$

Neither favorable nor unfavorableUnfavorableFavorable

(b)

Compute the total materials variance and the price and quantity variances, assuming the purchase price is $5.40and the quantity purchased and used is26,900units.

Total materials variance$

FavorableNeither favorable nor unfavorableUnfavorable

Materials price variance$

UnfavorableFavorableNeither favorable nor unfavorable

Materials quantity variance$

FavorableNeither favorable nor unfavorableUnfavorable