Williams Manufacturing Company has established the following materials standards for a particular product: 8.1 Pounds Standard quantity per unit of output Standard price $15.10 per pound The following data pertain to operations concerning the product for the last month: Actual materials purchased 6,840 Pounds Actual cost of materials purchased $93,500 Actual materials used in production 6,140 Pounds Actual output 1,300 Units What is the materials quantity variance for the month?

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Chapter1: Financial Statements And Business Decisions
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### Williams Manufacturing Company: Materials Standards and Variance Analysis

#### Materials Standards for a Particular Product:
- **Standard quantity per unit of output**: 8.1 Pounds
- **Standard price**: $15.10 per pound

#### Operational Data for the Last Month:
- **Actual materials purchased**: 6,840 Pounds
- **Actual cost of materials purchased**: $93,500
- **Actual materials used in production**: 6,140 Pounds
- **Actual output**: 1,300 Units

### Task: Calculate the Materials Quantity Variance for the Month
To calculate the materials quantity variance, use the following data:

- **Standard Quantity (SQ)** = Standard quantity per unit of output × Actual output
    - Standard Quantity (SQ) = 8.1 Pounds/unit × 1,300 Units = 10,530 Pounds

#### Formula Provided:
- **Materials Quantity Variance** = SP(AQ - SQ)
  - **SP**: Standard Price
  - **AQ**: Actual Quantity
  - **SQ**: Standard Quantity

#### Components:
- AQ = Actual materials used in production = 6,140 Pounds
- SQ = 10,530 Pounds (calculated as shown above)
- SP = Standard Price = $15.10 per pound

### Example Calculation of Materials Quantity Variance:
\[ \text{Materials Quantity Variance} = SP(AQ - SQ) \]
\[ = \$15.10 \times (6,140 - 10,530) \]
\[ = \$15.10 \times (-4,390) \]
\[ = -\$66,289 \]

The negative variance indicates that the company used fewer materials than the standard quantity allowed for the actual production, resulting in a favorable variance.

---

### Variance Formulas Provided by Instructor:
#### Direct Materials Variances:
1. **Materials Price Variance**: \( \text{AQ(AP - SP)} \)
   - AQ: Actual Quantity
   - AP: Actual Price
   - SP: Standard Price

2. **Materials Quantity Variance**: \( \text{SP(AQ - SQ)} \)
   - SP: Standard Price
   - AQ: Actual Quantity
   - SQ: Standard Quantity
   
Understanding these formulas is crucial for analyzing and managing operational efficiency and cost control in manufacturing processes.
Transcribed Image Text:### Williams Manufacturing Company: Materials Standards and Variance Analysis #### Materials Standards for a Particular Product: - **Standard quantity per unit of output**: 8.1 Pounds - **Standard price**: $15.10 per pound #### Operational Data for the Last Month: - **Actual materials purchased**: 6,840 Pounds - **Actual cost of materials purchased**: $93,500 - **Actual materials used in production**: 6,140 Pounds - **Actual output**: 1,300 Units ### Task: Calculate the Materials Quantity Variance for the Month To calculate the materials quantity variance, use the following data: - **Standard Quantity (SQ)** = Standard quantity per unit of output × Actual output - Standard Quantity (SQ) = 8.1 Pounds/unit × 1,300 Units = 10,530 Pounds #### Formula Provided: - **Materials Quantity Variance** = SP(AQ - SQ) - **SP**: Standard Price - **AQ**: Actual Quantity - **SQ**: Standard Quantity #### Components: - AQ = Actual materials used in production = 6,140 Pounds - SQ = 10,530 Pounds (calculated as shown above) - SP = Standard Price = $15.10 per pound ### Example Calculation of Materials Quantity Variance: \[ \text{Materials Quantity Variance} = SP(AQ - SQ) \] \[ = \$15.10 \times (6,140 - 10,530) \] \[ = \$15.10 \times (-4,390) \] \[ = -\$66,289 \] The negative variance indicates that the company used fewer materials than the standard quantity allowed for the actual production, resulting in a favorable variance. --- ### Variance Formulas Provided by Instructor: #### Direct Materials Variances: 1. **Materials Price Variance**: \( \text{AQ(AP - SP)} \) - AQ: Actual Quantity - AP: Actual Price - SP: Standard Price 2. **Materials Quantity Variance**: \( \text{SP(AQ - SQ)} \) - SP: Standard Price - AQ: Actual Quantity - SQ: Standard Quantity Understanding these formulas is crucial for analyzing and managing operational efficiency and cost control in manufacturing processes.
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