Standard Costing and Variance Analysis Problems & Solution:

Problem 1:Materials Variance Analysis:

The Schlosser Lawn Furniture Company uses 12 meters of aluminum pipe at $0.80
per meter asstandard for the production of its Type A lawn chair. During one month's
operations,100,000 meters of the pipe were purchased at $0.78 a meter, and 7,200
chairs were produced using 87,300 meters of pipe. The materials price variance is
recognized when materials are purchased.
Required:
Materials price and quantity variances.
Solution:
Meters of pipe Unit Cost Amount
Actual quantity purchased100,000
$0.78 actual$78,000
actual quantity purchased100,000$0.80standard$80,000--------------------------------Materials purchase price variance
100,000$(0.02)$(2,000) fav.=====================Actual quantity
used87,3000.80 standard$69,840Standard quantity allowed86,4000.80
standard$69120--------------------------------------Materials quantity variance
9000.80$720 Unfav=====================
Problem 2:Materials Variance Analysis:
The standard price for material 3-291 is $3.65 per liter. During November, 2,000
liters werepurchased at $3.60 per liter. The quantity of material 3-291 issued during
the month was 1775liters and the quantity allowed for November production was
1,825 liters. Calculate materials pricevariance, assuming that:
Required:
Materials price variance, assuming that:1.It is recorded at the time of purchase
(Materials purchase price variance).2.It is recorded at the time of issue (Materials
price usage variance).
Solution:
LitersUnit costAmount

Actual quantity purchased2,0003.60 actual$7,200Actual quantity

purchased2,0003.65 standard7,300