Reference no: EM132528639

Titan Company uses standard costs to control materials costs. The standards call for 3 pounds of materials for each finished unit produced. The standard cost per pound of materials is $2.00. During May, 5,000 finished units were manufactured, 10,000 pounds of materials were used. The price paid for materials was $2.25 per pound. There were no beginning or ending materials inventories.

Required:

Question 1: Determine the flexible budget materials cost for the manufacture of 5,000 finished units.

Question 2: Determine the actual materials cost incurred for the manufacture of 5,000 finished units, and compute the total materials variance.

Question 3: How much of the difference between the answers to requirements (a) and (b) was related to the quantity of materials used?

Question 4: How much of the difference between the answers to requirements (a) and (b) was related to the price paid for the purchase of materials?

Question 5: Give one possible explanation for the variances computed in requirements (c) and (d).