The Standards for Product V28 Call for 7

question 101

Essay

The standards for product V28 call for 7.5 pounds of a raw material that costs $18.10 per pound. Last month, 1,400 pounds of the raw material were purchased for $24,990. The actual output of the month was 160 units of product V28. A total of 1,300 pounds of the raw material were used to produce this output.The direct materials purchases variance is computed when the materials are purchased.Required:a. What is the materials price variance for the month?b. What is the materials quantity variance for the month?

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Definitions:

Reasonable Effort

The degree of diligence and attention expected under certain circumstances, typically what a reasonable person would do.

Nonconforming Goods

Merchandise that does not meet the specifications or requirements as outlined in a contract.

Not a Merchant

Refers to an individual or entity that does not engage in buying, selling, or trading of goods or services in a particular market, and thus may not be held to certain legal standards applicable to merchants.

Return the Goods

The process of a buyer sending previously purchased products back to the seller, usually under conditions specified in the return policy.