47. Idol Company has developed standards for the materials required to produce a single

unit of Model IWIN:

25 pounds of Supreme at $130.00 per pound
Last month, Idol purchased 490,000 pounds of Supreme at a total cost of
$61,250,000. Idol used 482,000 pounds of Supreme to make 19,000 units of IWIN.

Calculate the material price variance and material quantity variance, and indicate whether
each variance is favorable or unfavorable.

how much is 490,000 lbs of gold worth

To calculate the material price variance and material quantity variance, you need to follow these steps:

1. Calculate the standard cost per unit of material (Supreme) for Model IWIN:
Standard cost per unit = Standard price per pound x Standard quantity per unit
Standard cost per unit = $130.00 x 25 pounds
Standard cost per unit = $3,250.00

2. Calculate the actual cost per unit of material (Supreme) for Model IWIN:
Actual cost per unit = Total cost of material purchased / Total quantity of material purchased
Actual cost per unit = $61,250,000 / 490,000 pounds
Actual cost per unit = $125.00

3. Calculate the material price variance:
Material price variance = (Standard price per unit - Actual price per unit) x Actual quantity used
Material price variance = ($3,250.00 - $125.00) x 482,000 pounds
Material price variance = $3,125.00 x 482,000 pounds
Material price variance = $1,505,750,000

The material price variance is $1,505,750,000. Since the standard price per unit is higher than the actual price per unit, this variance is unfavorable.

4. Calculate the material quantity variance:
Material quantity variance = (Standard quantity per unit - Actual quantity used) x Standard price per unit
Material quantity variance = (25 pounds - 482,000 pounds) x $130.00 per pound
Material quantity variance = -457,000 pounds x $130.00 per pound
Material quantity variance = -$59,410,000.00

The material quantity variance is -$59,410,000.00. Since the actual quantity used is higher than the standard quantity per unit, this variance is also unfavorable.

Therefore, the material price variance is unfavorable ($1,505,750,000) and the material quantity variance is also unfavorable (-$59,410,000.00).