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-   -   Need Formula for Material Variances-Working Backwards (https://www.askmehelpdesk.com/showthread.php?t=415935)

  • Nov 14, 2009, 12:15 PM
    VivianNovak
    Need Formula for Material Variances-Working Backwards
    HERE IS THE PROBLEM AND THE ANSWER. I AM HAVING TROUBLE DETERMINE WHAT FORMULA WAS USED, IF ANY, AND UNDERSTANDING THE CONCEPT.


    Here is the problem

    Material Variances---Working Backwards

    Joseph Company's direct materials costs are as follows:

    Standard price per pound of direct materials $ 10.00
    Direct materials purchased (pounds) 2,000
    Total standard direct materials (pounds) for product manufactured 1,600
    Direct materials used in production (pounds) 1,800
    Direct materials purchase price variance - favorable 400

    Required compute the following:

    1. The actual purchase price per pound of direct material (rounded to the nearest penny)

    2. The direct materials usage variance

    ?ANSWER

    WHAT IS THE CORRECT FORMULA --- I CAN'T FIGURE IT OUT??


    2,000 lbs ($10 - ?) = 400 favorable

    400 DIVIDED BY 2,000 = .20 LB

    $ 10 (1600 LBS - 1800 LBS) = 2,000 UNFAVORABLE
  • Nov 16, 2009, 11:53 PM
    morgaine300

    Go visit this thread and see what you can figure out, and then come back with any specific questions you have:
    https://www.askmehelpdesk.com/financ...ls-408130.html

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