EXERCISE 10-15 (CONTINUED) ALTERNATIVE SOLUTION

Question

12,000 ounces ($18.75 per ounce* – $20.00 per ounce) = $15,000 F *$225,000 ÷ 12,000 ounces = $18.75 per ounce Materials quantity variance = SP (AQ – SQ) $20.00 per ounce (9,500 ounces – 9,375 ounces) = $2,500 U b. Yes, the contract probably should be signed. The new price of $18.75 per ounce is substantially lower than the old price of $20.00 per ounce, resulting in a favorable price variance of $15,000 for the Problem 10-17 (continued)

Answer

12,000 ounces ($18.75 per ounce* – $20.00 per ounce) = $15,000 F *$225,000 ÷ 12,000 ounces = $18.75 per ounce Materials quantity variance = SP (AQ – SQ) $20.00 per ounce (9,500 ounces – 9,375 ounces) = $2,500 U b. Yes, the contract probably should be signed. The new price of $18.75 per ounce is substantially lower than the old price of $20.00 per ounce, resulting in a favorable price variance of $15,000 for the Problem 10-17 (continued)

EXERCISE 10-15 (CONTINUED) ALTERNATIVE SOLUTION

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