Materials Variances North Wind manufactures decorative weather vanes that have a standard materials cost of two pounds of raw materials at $1.50 per pound. During September 5,000 pounds of raw materials costing $1.75 per pound were used in making 2,400 weather vanes. Determine the materials price and quantity variance

Material price variance = 1250

Quantity variance = 300

Explanation:

Actual price of raw material = $1.75

Standard price = $1.50

Actual quantity = $5000

Material price variance = [Actual price - Standard price] x Actual quantity

Material price variance = [1.75 - 1.50] x 5000

Material price variance = 1250

Quantity variance = [Actual quantity - Standard quantity] x Standard price

Quantity variance = [5000 - 2400 x 2] x 1.50

Quantity variance = 300

Material price variance $1,250

Material quantity variance $300

Explanation:

Calculation to determine the materials price and quantity variance

MATERIAL PRICE VARIANCE

Using this formula

Material price variance=(AP-SP)*AQ

Let plug in the formula

Material price variance=($1.75-$1.50)*5,000

Material price variance=$0.25*5,000

Material price variance=$1,250

Therefore Material price variance is $1,250

MATERIAL QUANTITY VARIANCE

Using this formula

Material quantity variance=(AQ-SQ)*SP

Let plug in the formula

Material quantity variance=(5,000-2*2,400)*$1.50

Material quantity variance=(5,000-4,800)*$1.50

Material quantity variance=200*$1.50

Material quantity variance=$300

Therefore Material quantity variance is $300

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