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    Material Price Variance, Material Quantity Variance & Overhead Volume Variance

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    Gumchara Corporation reported the following information with respect to the materials required to
    manufacture amalgam florostats during the current month:

    Standard price per gram of materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4
    Standard quantity of materials per amalgam florostat . . . . . . . . . . . . . . . . . . . . . 5 grams
    Actual materials purchased and used in production . . . . . . . . . . . . . . . . . . . . . . . 6,000 grams
    Actual amalgam florostats produced during the month . . . . . . . . . . . . . . . . . . . . 1,000 units
    Actual cost of materials purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18,000
    Normal monthly output . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900 units

    a. Determine Gumchara's materials price variance.

    b. Determine Gumchara's materials quantity variance.

    c. Will Gumchara's overhead volume variance be favorable or unfavorable? Why?

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    https://brainmass.com/business/accounting/material-price-variance-material-quantity-variance-overhead-volume-variance-628056

    Solution Preview

    a) MPV = Actual Quantity * (Standard Cost - Actual Cost)

    MPV = 1000 * (4 - 18000/6000)
    = 1000 * (4-3)
    ...

    Solution Summary

    The solution computes Material Price Variance & Material Quantity Variance. It also deduces what happens to Gumchara's overhead volume variance with given info.

    $2.19

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