Amanufactured product has the following information for june. standard actual direct materials (6 lbs. @ $8 per lb.) 48,500 lbs. @ $8.10 per lb. direct labor (2 hrs. @ $16 per hr.) 15,700 hrs. @ $16.50 per hr. overhead (2 hrs. @ $12 per hr.) $ 198,000 units manufactured 8,000 compute the direct materials price variance and the direct materials quantity variance. indicate whether each variance is favorable or unfavorable. aq = actual quantity sq = standard quantity ap = actual price sp = standard price

The direct material price variance is $4,850 unfavorable , and the direct materials quantity variance is $4,000 unfavorable.

Hence, both variance is unfavorable

Explanation:

Variance : The variance denotes the difference between actual cost and standard cost.

The the direct materials price variance and the direct materials quantity variance are the part of the standard costing.

1. The direct material price variance is calculating by taking a difference between the standard price and actual price which is multiply by the actual quantity.

The equation is given below:

= (Standard Price - Actual Price ) × Actual Quantity

= ($8 per lb. - $8.10 per lb. ) × 48,500lbs

= -$4,850 unfavorable

Since the amount is negative. so, the direct material price variance is unfavorable.

2. The direct materials quantity variance is computed by multiplying the standard price by taking a difference of standard quantity and actual quantity.

The equation is shown below:

= Standard Price × (Standard Quantity - Actual Quantity)

= $8 per lb × ($48,000 - $48,500)

= -$4,000

The standard quantity = units manufactured ×  per lbs.

= 8,000 × 6

= $48,000

The direct materials quantity variance shows negative sign. Hence it is unfavorable.

Thus, the direct material price variance is $4,850 unfavorable , and the direct materials quantity variance is $4,000 unfavorable.

Hence, both variance is unfavorable.

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