computed on the entire amount of materials purchased, whereas the materials quantity variance is computed only on the amount of materials used in production. Standard Quantity Actual Quantity Actual Quantity Allowed for Actual Output, of of Input, at Standard Price at Standard Price at Actual Price (SQ × SP) (AQ × SP) (AQ × AP) 40,000 diodes* × 50,000 diodes × 70,000 diodes × $0.30 per diode $0.30 per diode $0.28 per diode = $12,000 = $15,000 = $19,600 Materials quantity variance = $3,000 U 70,000 diodes × $0.30 per diode = $21,000 Materials variance = $1,400 F *5,000 toys × 8 diodes per toy = 40,000 diodes Alternatively, the variances can be computed using the formulas: Materials quantity variance = SP (AQ SQ) – = $0.30 per diode (50,000 diodes 40,000 diodes) – = $3,000 U Materials price variance = AQ (AP SP) – = 70,000 diodes ($0.28 per diode $0.30 per diode) – = $1,400 F Exercise 8-17 (continued) b. Direct variances: Standard Hours Allowed for Actual Output, Actual Hours of Input, Actual Hours of Input, at Standard Rate at Standard Rate at Actual Rate (SH × SR) (AH × SR) (AH × AR)
computed on the entire amount of materials purchased, whereas the materials quantity variance is computed only on the amount of materials used in production. Standard Quantity Allowed for Actual Output, at Standard Price (SQ × SP) Actual Quantity of at Standard Price (AQ × SP) Actual Quantity of Input, at Actual Price (AQ × AP) 40,000 diodes* × $0.30 per diode = $12,000 50,000 diodes × $0.30 per diode = $15,000 70,000 diodes × $0.28 per diode = $19,600 Materials quantity variance = $3,000 U 70,000 diodes × $0.30 per diode = $21,000 Materials variance = $1,400 F *5,000 toys × 8 diodes per toy = 40,000 diodes Alternatively, the variances can be computed using the formulas: Materials quantity variance = SP (AQ – SQ) = $0.30 per diode (50,000 diodes – 40,000 diodes) = $3,000 U Materials price variance = AQ (AP – SP) = 70,000 diodes ($0.28 per diode – $0.30 per diode) = $1,400 F Exercise 8-17 (continued) b. Direct variances: Standard Hours Allowed for Actual Output, at Standard Rate (SH × SR) Actual Hours of Input, at Standard Rate (AH × SR) Actual Hours of Input, at Actual Rate (AH × AR)
ch08solutions.docx