Materials Variances

Young Inc. produces plastic bottles. Production of 16-ounce bottles has a standard unit quantity of 0.45 ounce of plastic per bottle. During the month of June, 240,000 bottles were produced using 110,000 ounces of plastic. The actual cost of plastic was $0.042 per ounce, and the standard price was $0.045 per ounce. There is no beginning or ending inventories of plastic.

Required:

1. explain the materials price and usage variances using the columnar and formula approaches. explain if it is Favorable or Unfavorable.

Materials Price Variance $

Material Usage Variance $