The Following Direct Materials Variance Computations Are Incomplete

question 143

Essay

The following direct materials variance computations are incomplete. Fill in the missing values, and identify the direct materials flexible budget variance as favorable or unfavorable.
Direct materials price variance = ($? - $12.50)× 7,000 pounds = $3,500 U
Direct materials quantity variance = (? - 6,700 pounds)× $12.50 = ? U
Direct materials flexible budget variance = $?

---

Definitions:

Equivalent Unit

A measurement used in accounting to express the amount of work done on partially finished goods, converted into the equivalent of fully finished units.

First Department

Represents the initial segment or section in a manufacturing or production process where raw materials begin their transformation.

FIFO Method

First In, First Out, an inventory valuation method that assumes the items purchased or produced first are sold first.

Equivalent Units

A concept used in cost accounting to convert partially completed goods into a number of fully completed units for accounting purposes.