ACCT 203 Lecture 17: Example of Price and Quantity variances
Document Summary
The standard materials cost to produce one unit of product k is 7 pounds of material at a standard price of per pound. In manufacturing 8,000 units, 54,000 pounds of material were used at a cost of per pound. Price variance = x 54,000 pounds = ,000 favorable. Quantity variance = 2,000 pounds x = ,000 favorable. Total direct material cost variance = ,000 favorable. Total budgeted cost ,792,000 7 lbs at /lb x 8000 units. Total actual cost 1,620,000 54000 lbs at lb. Bradford company budgeted 4,000 pounds of material costing per pound to produce 2,000 units. The company actually used 4,500 pounds that cost . 10 per pound to produce 2,000 units. ,950 unfavorable (act price std price) x act qty ( - . 10) *4,500 pounds = unfavorable. A job was budgeted to require three hours of labor per unit at . 25 per hour.
