Aquatic Corp.'s standard material requirement to produce one Model 2000 is 15 pounds of material @ $110.00 per pound. Last month, Aquatic purchased 170,000 pounds of material at a total cost of $17,850,000. It used 162,000 pounds to produce 10,000 units of Model 2000.
Calculate the materials price variance and materials quantity variance, and indicate whether each variance is favorable or unfavorable.

Question

Aquatic Corp.'s standard material requirement to produce one Model 2000 is 15 pounds of material @ $110.00 per pound. Last month, Aquatic purchased 170,000 pounds of material at a total cost of $17,850,000.  It used 162,000 pounds to produce 10,000 units of Model 2000.   
Calculate the materials price variance and materials quantity variance, and indicate whether each variance is favorable or unfavorable.

Quizplus · Accepted Answer

The Answer of Aquatic Corp.'s standard material requirement to produce one Model 2000 is 15 pounds of material @ $110.00 per pound. Last month, Aquatic purchased 170,000 pounds of material at a total cost of $17,850,000.  It used 162,000 pounds to produce 10,000 units of Model 2000.   
Calculate the materials price variance and materials quantity variance, and indicate whether each variance is favorable or unfavorable.