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1 September, 03:18

Krumple Inc. produces aluminum cans. Production of 12-ounce cans has a standard unit quantity of 4.7 ounces of aluminum per can. During the month of April, 450,000 cans were produced using 1,875,000 ounces of aluminum. The actual cost of aluminum was $0.10 per ounce and the standard price was $0.08 per ounce. There are no beginning or ending inventories of aluminum.

Required:Calculate the total variance for aluminum for the month of April. Enter amount as a positive number and select Favorable or Unfavorable.

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  1. 1 September, 07:07
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    -$18,300 (Unfavorable)

    Explanation:

    Material price per variance:

    = Ounces of aluminium used in production (Standard price - Actual cost per ounce)

    = 1,875,000 ($0.08 - $0.10)

    = 1,875,000 * (-$0.02)

    = - $37,500 (Unfavorable)

    Material usage variance:

    = [ (Cans produced * Standard unit quantity) - Ounces of aluminium used in production] * Standard price

    = [ (4,50,000 * 4.7) - 1,875,000] * 0.08

    = $19,200 (Favorable)

    Therefore,

    Total variance = Material price per variance + Material usage variance

    = - $37,500 + $19,200

    = - $18,300 (Unfavorable)
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