Standard cost system materials variances Levron Corporation manufactures a line of cosmetics. The standard price of the ingredients in its beauty cream is $7 per ounce; the standard amount of material allowed per jar is 1.25 ounces

During December, 5,300 jars were produced, requiring 6,784 ounces of ingredients at a total direct materials cost of $37,312.

(a) Calculate the materials price variance for December. Indicate whether it is favorable (F) or unfavorable (U). $__________
(b) Who is responsible for this variance? _________
(c) Calculate the materials quantity variance for December. Indicate whether it is favorable (F) or unfavorable (U). $__________
(d) What is Levron Corporation's total materials variance for December? Indicate whether it is favorable (F) or unfavorable (U). $__________

What will be an ideal response?

a) $10,176 F (b) purchase agent (c) $1,113 U (d) $9,063 F

Feedback: (a) Actual quantity × (standard price - actual price)
6,784 ounces × [$7 - ($37,312/6,784)]
6,784 ounces × ($7.00 - $5.50) = $10,176 F

(b) Purchasing agent

(c) Standard price × (standard quantity - actual quantity)
$7 per ounce × [(5,300 × 1.25) - 6,784 ounces]
$7 per ounce × (6,625 ounces - 6,784 ounces) = $1,113 U

(d) $10,176 F - $1,113 U = $9,063 F or
Standard cost (6,625 × $7) - actual cost $37,312 = $9,063 F