Squeaky Clean produces commercial strength cleansing supplies. Two of its main products are window cleanser that uses ammonia, and floor cleanser that uses bleach. Information for the most recent period follows: Product Names Window Cleaner (ammonia) Floor Cleaner (bleach) Direct materials information Standard ounces per unit 12 oz. 29 oz. Standard price (SP) per ounce $ 1.00 ? Actual quantity (AQ) used per unit 26 oz. 25 oz. Actual price (AP) paid for material $ 1.50 $ 0.94 Actual quantity purchased (AQP) and used 1 comma 400 oz. 3 comma 000 oz. Price variance ? $ 870 U Quantity variance $ 6 comma 300 U ? Flexible budget variance ? $ 950 F Number of units produced 300 700 What is the direct materials flexible budget variance for ammonia?

The direct materials flexible budget variance for ammonia is $7,000 Unfavorable

Explanation:

In order to calculate the direct materials flexible budget variance for ammonia first we need to Calculate Direct Material Price Variance  as follos:

Direct Material Price Variance = Actual Material Purchased(Actual Rate - Standard Rate)

Direct Material Price Variance = 1,400 * ($1.50 - $1.00)

= $700 (Unfavorable)

Therefore, in order to calculate the Direct Material Flexible Budget Variance we would have to use the folloiwng formula:

Direct Material Flexible Budget Variance = Direct Material Price Variance + Direct Material Quantity Variance

Flexible Budget Variance for Ammonia = $700 (U) + $6,300 (U)

= $7,000 (Unfavorable)

The direct materials flexible budget variance for ammonia is $7,000 Unfavorable

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