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3 September, 16:33

Bonita Industries planned to use 1 yard of plastic per unit budgeted at $101 a yard. However, the plastic actually cost $100 per yard. The company actually made 4600 units, although it had planned to make only 3800 units. Total yards used for production were 4660. How much is the total materials variance?

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  1. 3 September, 16:57
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    total materials variance is $1400 Unfavorable

    Explanation:

    given data

    budgeted = $101

    actually cost = $100 per yard

    company actually made = 4600 units

    planned to make = 3800 units

    Total yards used for production = 4660

    to find out

    How much is the total materials variance

    solution

    we know that company made 4600 so 4600 yards should be use of material but here actually used 4660 yards

    so materials quantity variance is = 60 * $100 = $6000 Unfavorable

    material more used

    and

    here materials bought less than standard price

    so that we can say, materials price variance is favorable

    so 4600 units should used materials costing = 4600 * $101

    initial estimates materials costing = $464600

    and

    Actually 4600 use materials costing = 4600 * 100 = $460000

    so

    materials price variance = $464600 - $460000 = 4600 Favorable

    and

    total materials variance = $4600 - $6000 = - 1400

    so total materials variance is $1400 Unfavorable
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