Tercer reports the following for one of its products

Management Nov 12, 2020

Tercer reports the following for one of its products.
Direct materials standard (4 lbs. @ $3 per lb.) 12 per finished unit Actual direct materials used (AQ) 330,000 lbs. Actual finished units produced 68,000 units Actual cost of direct materials used $907,500
AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price
Compute the direct materials price and quantity variances and classify each as favorable. unfavorable or no variance.

Expert Solution

*Actual Price = $907,500/330,000 = $2.75

** Standard Quantity = 68,000 * 4 = 272,000

Direct Material Price Variance = $82,500 F

Direct Material Quantity Variance = $ 174,000 U

Total Direct Material Variance = $91,500 U

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