PDA

View Full Version : Calculating Material Variances


567Confu
Oct 1, 2006, 03:09 PM
The standard price for the Z240 electrical relay (a component used in the production of a commercial refrigeration unit) is $25. Standards call for 2 relays per unit of finished product. In July, the company purchases 100 relays for $2,600. The company used 83 relays in the production of 40 refrigeration units (three relays were damaged in the installation process).

Calculate the material price variance and the material quantity variance related to the Z240 electrical relay. Indicate whether the variances are favorable or unfavorable.

CaptainForest
Oct 1, 2006, 06:50 PM
Material Price Variance = Qa (Ps-Pa)
Where Qa is actual quantity used, Ps is standard/budget price and Pa is actual price

Material Efficiency Variance = Ps (Qs-Qa)
Where Ps is standard/budget price, Qs is budget quantity, and Qa is actual quantity used

You tell us what you think the answer is, and why and we will look it over for you.

Hint: Use the formulas.

Barry meister
Apr 2, 2008, 05:39 AM
Can you list all the variances

staceanng
Jun 27, 2010, 07:16 AM
Price variance = $83

staceanng
Jun 27, 2010, 07:31 AM
Price variance = $83

staceanng
Jun 27, 2010, 07:32 AM
Price variance = $83