Scorpion production company planned to use 1 yard of plastic per unit budgeted at $81 a yard. however, the plastic actually cost $80 per yard. the company actually made 3,900 units, although it had planned to make only 3,300 units. total yards used for production were 3,960. how much is the total materials variance?

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Business

Hale

16 June, 11:58

Scorpion production company planned to use 1 yard of plastic per unit budgeted at $81 a yard. however, the plastic actually cost $80 per yard. the company actually made 3,900 units, although it had planned to make only 3,300 units. total yards used for production were 3,960. how much is the total materials variance?

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Nia Brooks · Answer 1

The total material variance is calculated through the equation,

total material variance = (SP x SQ) - (AP x AQ)

where SP and SQ are standard price and standard quantity, respectively and AP and AQ are actual price and actual quantity, respectively.

Substituting the known values,

total material variance = ($81 x 3300) - ($80 x 3900)

= - $44,700