Answer:
price variance 12,000 U
quantity variance 4,500 U
Explanation:
[tex](standard\:cost-actual\:cost) \times actual \: quantity= DM \: price \: variance[/tex]
std cost $9.00
actual cost $9.20
quantity 60,000
These are givens so no calculation needed.
[tex](9-9.20) \times 60,000= DM \: price \: variance[/tex]
difference $(0.20)
price variance $(12,000.00)
The difference is negative, we purchase at a higher price, so the variance is unfavorable
[tex](standard\:quantity-actual\:quantity) \times standard \: cost = DM \: quantity \: variance[/tex]
std quantity 59500.00 (7 lbs per unit x 8,500 untis manufactured)
actual quantity 60000.00
std cost $9.00
[tex](59,500-60,000) \times 9 = DM \: quantity \: variance[/tex]
difference -500.00
efficiency variance $(4,500.00)
The difference betwene standard lbs and the actual lbs used into production is negative, we use more lbs than standard. This variance is also unfavorable.
