Ozarks Camping Equipment, Inc. has established the following direct-material standards for its...
Question:
Ozarks Camping Equipment, Inc. has established the following direct-material standards for its two products.
| Standard Quantity | Standard Price | |
|---|---|---|
| Standard camping tent | 9 yards | $3.50 per yard |
| Deluxe backpacking tent | 4 yards | $5.20 per yard |
During May, the company purchased 5,900 yards of tent fabric for its standard model at a cost of $22,420. The actual May production of the standard tent was 290 tents and 2,670 yards of fabric were used. Also, during May, the company purchased 2,900 yards of tent fabric for its deluxe backpacking tent at a cost of $14,500. The firm used 1,480 yards of the fabric during May in the production of 370 deluxe tents.
Compute the direct-material purchase price variance and quantity variance for May.
Direct Materials Variance:
Direct materials variance measures the difference between standard cost or quantity from actual cost or quantity. The two components of direct materials variance are direct materials purchase or usage price variance and direct materials quantity variance.
Answer and Explanation: 1
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View this answerThe direct-material purchase price variance and quantity variance for May are:
- Direct materials purchase variance= $1,120 Unfavorable variance
- Direc...
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Calculating Direct Materials & Direct Labor Variances
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Chapter 13 / Lesson 3
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Learn how to calculate variances with direct materials and direct labor. Variances are changes to the costs an organization has budgeted, they can be either favorable or unfavorable.
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