Question
TinkInc. produces fairy wands which contain the key ingredient of pixy dust. Each fairy wand is budgeted to use 3 grams of pixy dust at
TinkInc. produces fairy wands which contain the key ingredient of pixy dust. Each fairy wand is budgeted to use 3 grams of pixy dust at a price of $2.00 per gram. During the quarter, 22,000 grams were purchased for $2.10 per gram, while only 20,000 grams were used in production to produce 7,000 fairy wands.
Compute the direct materials price and efficiency variances. Be sure to indicate whether the variances are favorable or unfavorable.
Based on your answer above, briefly explain the material variances of TinkInc. Be sure to provide a plausible explanation for each variance. If you were the purchasing manager at TinkInc., are you happy with your performance?
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