Question
The following data relate to the direct materials cost for the production of 2,500 automobile tires: Actual: 51,000 lbs. at $1.9 per lb. Standard: 52,500
The following data relate to the direct materials cost for the production of 2,500 automobile tires:
Actual: | 51,000 lbs. at $1.9 per lb. | |
Standard: | 52,500 lbs. at $1.95 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 | $ | favorable or unfavorable |
Direct Materials Quantity Variance | $ | favorable or unfavorable |
Total Direct Materials Cost Variance | $ | favorable or unfavorable |
b. The direct materials price variance should normally be reported to the plant manager or purchasing deparment . When lower amounts of direct materials are used because of production efficiencies, the variance would be reported to the purchasing deparment or purchasing 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 purchsing deparment or purchasing supervisor .
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