Question
You have been given the following per unit information about the production of Gillian Inc., and are asked to provide the plant manager with information
You have been given the following per unit information about the production of Gillian Inc., and are asked to provide the plant manager with information for a meeting with the vice-president of operations:
Standard
QuantityStandard
PriceActual
QuantityActual
PriceDirect materials5 kg$3 / kg5.5 kg$2.80 / kg
Production data, both budgeted and actual, for the year are as follows:
DescriptionAmountActual production (units)40,000Actual materials purchased and used (kg)220,000
Required:
Calculate the direct material price and usage (also called efficiency) variances and use your solution to answer the following questions.
NOTE:Please enter all variances as positive numbers.
The amount of the direct material price variance is $____________.
Indicate if the direct material price variance is favourable (enter the letter F) or unfavourable (enter the letters UF).
The amount of the direct material usage variance (also called efficiency variance) is $____________.
Indicate if the direct material usage variance is favourable (enter the letter F) or unfavourable (enter the letters UF).
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