Direct material price variances, Cost Accounting

Assignment Help:

Direct Material Price Variances

The two direct material price variances can be summarized given as:

1303_Direct Material Price Variances.png

From our basic data first before the beginning of the discussion on variances, then we can calculate as given:

i.) Direct Materials price variance= (AQ X AP) - (AQ X SP)

                                               = (6,500 X 3.80) - (6,500 X 4)

                                               = 6,500 (3.80 - 4)

                                              = Kshs.1,300  Favourable

The variance is favourable since we utilized less costs than the standard cost.

ii) Direct Materials usage variance   = (AQ X AP) - (SQ X SP)

                                                = (6,500 X 3.80) - (6,000 X 4)

                                                = 24,700 - 24,000

                                                = 700 Unfavourable

Note that the above equation total materials variance agrees along with the specified as:

Total Materials Variance      = Price Variance + Usage (Efficiency) Variance

                                        = 1300 (Favourable) + 2000 (Unfavourable)

                                        = Kshs.700 unfavourable.

Tutorial Note Please makes sure you follow the basics of the calculation of the direct material variances calculations hence you can effectively follow the given variances sections.


Related Discussions:- Direct material price variances

Evaluate amount of goodwill should horace wimp record, Blue sky Company's 1...

Blue sky Company's 12-31-13 balance sheet reports assets of $5,000,000 and liabilities of $2,000,000. All of the book value's are the same as the market values except for land, wh

Valuation of work in progress, Valuation of Work In Progress The con...

Valuation of Work In Progress The concept of Equivalent units It is a notional quantity of completed goods in the production process. This is a collection of work applic

What is bad debt expense, What is bad debt expense, using the aging method ...

What is bad debt expense, using the aging method (also called the "percentage of receivables" method), given the following set of facts?   A firm has $80 of gross accounts recei

Absoption costing, 2001 2002 sale 3200 units 3500 uni...

2001 2002 sale 3200 units 3500 units selling prise Rs.60 Rs.65 unit produced 3400 units 3600 units direct metrial Rs 23 25

explain your calculation of relevant net cash flows, Polycorp Limited Stee...

Polycorp Limited Steel Division is considering a proposal to purchase a new machine to manufacture a new product for a potential three year contract.  The new machine will cost $1

An impact on the breakeven, We've all experienced (or heard about) the chal...

We've all experienced (or heard about) the challenges that the airlines have been facing. Read the Zacks Investment Research article, "Airline Industry Stock Outlook - August 2012"

Cost - terms used in cost accounting, Cost - Terms Used in Cost Accounting ...

Cost - Terms Used in Cost Accounting It measures the economic sacrifice created to achieve an organizations aims. For a product, cost represents the monetary measurement of re

What is the free cash flow for master designs, Master Designs Company has c...

Master Designs Company has cash flows for operating activities of $350,000. Cash flows used for investments in property, plant, and equipment totaled $65,000, of which 70% of this

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd