Gates Corporation reported the following information concerning its direct materials: Direct materials purchased (actual) $ 673,000 Standard cost of materials purchased $ 688,000 Standard price times actual amount of materials used $ 444,000 Actual production 22,000 units Standard direct materials costs per unit produced $ 20Required: Compute the direct materials cost variances.

The answer is 15000 F

Explanation:

Solution

Given that:

Direct materials purchased = $673,000

Standard cost of materials purchased = $688,000

Actual production = 22,000 unit

Standard price times real amount of materials = $ 444,000

Now we find the direct materials cost variances.

Thus

Direct material price variance = (444000-673000)

= 229000 U

Then

Direct material efficiency variance = (688000-444000)

= 244000 F

Total cost variance = (688000-673000)

= 15000 F

Therefore the direct materials variances is 15000 F