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Monthly cost analysis – Brown Company

Author:
September 23rd, 2022

The following activity took place in Brown Company during May:

Number of units produced…. 450 units
Material purchased…. 1,500 feet
Material used in production… 720 feet
Cost per foot of material purchased… $3

The standard cost card indicates that 1.5 feet of materials are allowed for each unit of product. The standard cost of the materials is $4 per foot.

a. Complete the following analysis of direct materials cost for the month:

Annual Quantity of Actual Quantity of Standard Quantity allowed
Inputs at Actual Price Inputs, at Standard Price for Output, at Standard Price
(AQ * AP) (AQ * SP) (SQ * SP)
____________ ____________ ____________
____________ ____________ ____________
____________ ____________ ____________

↑_____________________↑ ↑

_____________ │
_____________ │

↑____________________↑

b. Redo the above analysis of direct materials cost for the month, using the following formulas:

Materials price variance = AQ AP – SP)

Materials quantity variance = SP (AQ – SQ)

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