Respuesta :
Answer:
a. Material Price Variance = $7,360 Unfavorable
b. Material Quantity Variance = $2,562 Unfavorable
Explanation:
We have,
Material Price Variance = ( Standard Price - Actual Price) [tex]\times[/tex] Actual Quantity.
Here Standard Price per unit = $18.30 per meter
Actual Price = $185,270/9,700 = $19.10 per meter
Actual quantity used is to be considered. = 9,200
Not the quantity purchased.
Therefore, Material Price Variance = ($18.30 - $19.10) [tex]\times[/tex] 9,200 = - $7,360. Since value is negative it is unfavorable as standard price is less than actual.
Material Quantity Variance = (Standard Quantity - Actual quantity) [tex]\times[/tex] Standard Price
Standard Quantity for Actual Output = 1,510 [tex]\times[/tex] 6 = 9,060 meter
Actual Quantity used = 9,200 meters
Therefore Material Quantity Variance = ( 9,060 - 9,200 )[tex]\times[/tex] $18.30 = - $2,562
Since value is negative it is unfavorable as actual quantity used is higher than standard quantity.
Therefore, we have
a. Material Price Variance = $7,360 Unfavorable
b. Material Quantity Variance = $2,562 Unfavorable
The materials price variance for the month is $7,360 Unfavorable
The materials quantity variance for the month is $2,562 Unfavorable
What is cost benefit analysis?
Cost-benefit analysis is a way to compare the costs and benefits of an intervention, where both are expressed in monetary units.
a. The materials price variance for the month
= ( Standard Price - Actual Price) * Actual Quantity.
= [$18.30 - ($185,270/9,700)] * 9,200
= ($18.30 - $19.10) * 9,200
= -$7,360 Unfavorable
b. The materials quantity variance for the month
= (Standard Quantity - Actual quantity) Standard Price
= [(1,510 * 6) - 9,200 ] * $18.30
= (9,060 - 9,20 ) * $18.30
= - $2,562 Unfavorable
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