Q6SE - Horngren'S Financial And Managerial Accounting

Question

Martin, Inc. is a manufacturer of lead crystal glasses. The standard direct materialsquantity is 1.0 pound per glass at a cost of \(0.50 per pound. The actual result for onemonth’s production of 6,500 glasses was 1.2 pounds per glass, at a cost of \)0.30 perpound. Calculate the direct materials cost variance and the direct materials efficiencyvariance.

Step-by-Step Solution

Answer

The direct material cost variance of the company is $1,560(F) and the direct materials efficiency variance of the company is $650(U).

Step 1: Computation of the direct materials cost variance-

 

Direct materials cost variance
Actal quantity [6,500 x 1.2] (a)	$7,800
Actual price (b)	$0.30
Standard price (c)	$0.50
Direct materials cost variance [a*(b-c)]	$1,560 (F)

 

Step 2: Computation of the direct materials efficiency variance-

Direct materials efficiency variance
Standard price (a)	$0.50
Actual quantity [6,500 x1.2] (b)	$7,800
Standard quantity [6,500 x1.0] (c)	$6,500
Direct materials efficiency variance [a*(b-c)]	$650 (U)