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Materials Variance Formulas

The document outlines the formulas for calculating total, price, and quantity materials variances. It provides the standard and actual quantities, prices, and costs and uses them to calculate the variances. The total variance was $8,000 favorable, the price variance was $13,500 favorable, and the quantity variance was $5,500 unfavorable. An example is also provided to demonstrate how to determine the amounts to use in the variance formulas.

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1K views2 pages

Materials Variance Formulas

The document outlines the formulas for calculating total, price, and quantity materials variances. It provides the standard and actual quantities, prices, and costs and uses them to calculate the variances. The total variance was $8,000 favorable, the price variance was $13,500 favorable, and the quantity variance was $5,500 unfavorable. An example is also provided to demonstrate how to determine the amounts to use in the variance formulas.

Uploaded by

Mary
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF or read online on Scribd
  • Materials Variance Formulas
  • Variance Formulas Exercise Example

Materials Variance Formulas Total, Price, and Quantity

AQ = Actual Quantity AP = Actual Price SQ = Standard Quantity SP = Standard Price F = Favorable is when the actual is lower than the standard. U = Unfavorable is when the actual is higher than the standard. Standard Quantity (SQ) Formula Actual Units Produced X Units of material required per unit Step 1 (7,250 X 4) Step 2 = 29,000 Note: Actual Quantity, Actual Price, and Standard Price will all be given to you in the problem. Total Materials Variance Formula (AQ X AP) - (SQ X SP) (30,000 X $5.05) - (29,000 X $5.50) $151,500 - $159,500 = $8,000 F Materials Price Variance Formula (AQ X AP) - (AQ X SP) (30,000 X $5.05) - (30,000 X $5.50) $151,500 - $165,000 = $13,500 F Materials Quantity Variance Formula (AQ X SP) - (SQ X SP) (30,000 X $5.50) - (29,000 X $5.50) $165,000 - $159,500 = $5,500 U

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MJC 12/2012

Page 1

Materials Variance Formulas Total, Price, and Quantity


How to Determine Amounts for Variance Formulas Exercise Example: The standard cost of Product- A manufactured by Morrison Pet Supply Company includes four units of direct material at $5.50 per unit. During August, 30,000 units of direct materials are purchased at a cost of $5.05 per unit. And 30,000 units of direct materials are used to produce 7,250 units of Product -A. AQ = 30,000 units of direct materials used to produce 7,250 units of Product-A AP = $5.05 Actual price paid per unit of direct materials SQ = (7,250 units of Product-A produced X 4 units Estimated direct material to produce one unit of Product-A) which equals 29,000 total units of direct material. SP = $5.50 Estimated price to be paid per unit of direct material.

MJC 12/2012

Page 2

Materials Variance Formulas – Total, Price, and Quantity MJC 12/2012 Page 1 AQ = Actual Quantity AP = Actual Pric
Materials Variance Formulas – Total, Price, and Quantity MJC 12/2012 Page 2 How to Determine Amounts for Variance Fo

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