Calculate direct material variances when the quantity purchased equals the quantity used Streetsboro Ceramics produces large planters to be used in urban landscaping projects. A special earth clay is used to make the planters. The standard quantity of clay used for each planter is 24 pounds. The company uses a standard cost of $1.96 per pound of clay. Streetsboro produced 3,500 planters in May. In that month, 87,500 pounds of clay were purchased and used at the total cost of $168,000.
Requirements
1. Calculate the direct material price variance.
2. Calculate the direct material quantity variance.