Barb Bubbletop (BB) produces bangles. Each bangle requires .25 lbs of bronze which should cost $16 per lb. In August, BB purchased 12,000 lbs of bronze at $15 per lb. In the month, 41,000 bangles were made, and 11,000 lbs of bronze were used. Which is false of BB's materials variances?
A)The company should have spent $164,000 on materials
B)Bronze inventory increased by $15,000
C)Material quantity variance is $18,000 unfav
D)Materials price variance is $12,000 unfav
E)All of the above are false

Question

Quizplus · Accepted Answer

A) The company should have spent $176,000 on materials (12,000 lbs at $16 per lb). B) Bronze inventory increased by 1,000 lbs, which at $15 per lb is an increase of $15,000, making this statement true, not false. C) The material quantity variance is calculated based on the actual quantity used versus the standard quantity allowed for actual production. The standard quantity for 41,000 bangles at .25 lbs each is 10,250 lbs. The actual quantity used was 11,000 lbs, so the variance is 750 lbs at $16 per lb, which equals $12,000 unfav, not $18,000. D) The materials price variance is based on the difference between the standard cost and the actual cost of the materials purchased. The actual cost was $15 per lb, and the standard cost was $16 per lb. The variance for 12,000 lbs is $12,000 fav, not unfav.

Barb Bubbletop (BB) Produces Bangles