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The standard cost of Product B manufactured by Pharrell Company includes three units of direct materials at $5.00 per unit. During June, 29,000 units of direct materials are purchased at a cost of $4.70 per unit, and 29,000 units of direct materials are used to produce 9, 400 units of Product B. Instructions (a) Compute the total materials variance and tin-;>> and quantity variances. (b) Repeat (a), assuming the purchase price is $5.15 and the quantity purchased and used is 28,000 units.

Respuesta :

(a) The total materials variance 4700 favorable and quantity variances 4000 unfavorable. (b) The total materials variance 3200 favorable and quantity variances 1000 favorable.

Components that go into a produced item are known as direct materials. For instance, the direct materials used in the creation of a smartphone are the screen, integrated circuits, camera modules, and buttons. Contrast this with indirect materials, which are components of the overall manufacturing process but do not appear in the finished product. Direct materials procurement is seen as having high stakes since it has a significant impact on supply chain effectiveness, client sales, and ultimately a company's top and bottom lines. Additionally, managing direct materials costs is more than just a business responsibility in today's highly dynamic, international supply chains; it's also a chance to achieve a strategic competitive edge.

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