Direct Materials Variances

Direct Materials Variances - difference between the actual...

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DIRECT MATERIALS VARIANCES In completing the order for 1,000 gallons of Weed-O, Xonic used 4,200 pounds of direct materials.  These were purchased at a cost of $3.10 per unit. Illustration  22-10  shows the formula for the  total   materials variance  and the calculation for Xonic, Inc.  Illustration 22-10    Formula for total materials variance Thus, for Xonic, the total materials variance is $1,020 ($13,020 - $12,000) unfavorable. Next, the company analyzes the total variance to determine the amount attributable to price (costs)  and to quantity (use). The  materials price variance  for Xonic, Inc. is computed from the following  formula. 1   Illustration 22-11    Formula for materials price variance For Xonic, the materials price variance is $420 ($13,020 - $12,600) unfavorable.  Helpful Hint The alternative formula is:
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The price variance can also be computed by multiplying the actual quantity purchased by the 
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Unformatted text preview: difference between the actual and standard price per unit. The computation in this case is 4,200 ($3.10 - $3.00) = $420 U. Illustration 22-12 shows the formula for the materials quantity variance and the calculation for Xonic, Inc. Illustration 22-12 Formula for materials quantity variance Thus, for Xonic, Inc., the materials quantity variance is $600 ($12,600 - $12,000) unfavorable. Helpful Hint The alternative formula is: The price variance can also be computed by applying the standard price to the difference between actual and standard quantities used. The computation in this example is $3.00 (4,200 - 4,000) = $600 U. The total materials variance of $1,020 U, therefore, consists of the following. Illustration 22-13 Summary of materials variances...
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This note was uploaded on 11/08/2011 for the course ACCOUNTING ac 202 taught by Professor - during the Fall '11 term at Montgomery.

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Direct Materials Variances - difference between the actual...

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