Standard Cost System Materials Variances

question 88

Essay

Standard cost system materials variances
Levron Corporation manufactures a line of cosmetics.The standard price of the ingredients in its beauty cream is $7 per ounce;the standard amount of material allowed per jar is 1.25 ounces.During December,5,300 jars were produced,requiring 6,784 ounces of ingredients at a total direct materials cost of $37,312.
(a)Calculate the materials price variance for December.Indicate whether it is favorable (F)or unfavorable (U).$________
(b)Who is responsible for this variance? ________
(c)Calculate the materials quantity variance for December.Indicate whether it is favorable (F)or unfavorable (U).$________
(d)What is Levron Corporation's total materials variance for December? Indicate whether it is favorable (F)or unfavorable (U).$________

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Definitions:

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price in a given time period.

World Price

The international price at which goods are traded between countries, affecting domestic markets.

No-Trade Prices

Prices at which market participants are not willing to trade, indicating either a lack of demand at higher prices or a lack of supply at lower prices.

Trade Barriers

Policies or regulations imposed by governments to limit the free exchange of goods and services across countries, including tariffs and quotas.