Answer:
Total material variance= $1,980 unfavorable
Direct material quantity variance= $1,260 favorable
Direct material quantity variance= $1,260 favorable
Explanation:
Giving the following information:
Simba Company's standard materials cost per unit of output is $10.50 (2.50 pounds x $4.20). During July, the company purchases and uses 2,700 pounds of materials costing $14,580 in making 1,200 units of the finished product.
The total variance is the difference between the estimated total cost for 1,200 units and the actual cost:
Total material variance= total estimated cost - total actual cost
Total material variance= (2.5*4.20*1,200) - 14,580= 1,980 unfavorable
Now, we can dissect the variance in price and quantity:
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (4.2 - 14580/2,700)*2,700
Direct material price variance= (4.2 - 5.4)*2,700= 3,240 unfavorable
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (2.5*1,200 - 2,700)*4.2
Direct material quantity variance= (3,000 - 2,700)*4.2= $1,260 favorable
Total variance= 3,240 unfavorable - 1,260 favorable= 1,980 unfavorable
