Wild Birds in the Garden, Inc., has gone ahead and launched its new baffle for bird feeders. The company has established the following standards for powdered graphite, one of the key raw materials required by the product: standard quantity allowed per baffle: 0.5 ounces; standard price: $2 per ounce. The first production run of 500 baffles consumed 265 ounces of powdered graphite that was purchased at a total cost of $556.50.
Required:
Compute the material price variance and the material usage variance. How have these variances affected the company's original estimate of the cost to produce the baffle?

Question

Quizplus · Accepted Answer

The Answer of Wild Birds in the Garden, Inc., has gone ahead and launched its new baffle for bird feeders. The company has established the following standards for powdered graphite, one of the key raw materials required by the product: standard quantity allowed per baffle: 0.5 ounces; standard price: $2 per ounce. The first production run of 500 baffles consumed 265 ounces of powdered graphite that was purchased at a total cost of $556.50.
Required:
Compute the material price variance and the material usage variance. How have these variances affected the company's original estimate of the cost to produce the baffle?