Question:
opportunity to purchase the necessary material at a vendor's bankruptcy sale at $1.40 per pound rather than the standard cost of $2.10 per pound. The purchasing agent purchases 100,000 pounds of material on May 31.During the next four months, the company's production and material usage was as follows:
|
Production
|
Quantity Used
|
|
June
|
3,000
|
16,400 lb.
|
|
July
|
3,400
|
17,540 lb.
|
|
August
|
2,900
|
14,950 lb.
|
|
September
|
2,500
|
13,200 lb.
|
a. What is the material price variance for this purchase?
b. What is the material quantity variance for each month for this material?
c. What might be the cause of the unfavorable material quantity variances?