Amos, IncUses a Standard Cost System in Which Direct Materials Are

Essay

Amos, Inc.uses a standard cost system in which direct materials are carried at standard cost.Standards for one unit of product are: standard quantity of 8½ gallons and standard price $1.85 per gallon.During March, Amos purchased 150,000 gallons of direct materials at a cost of $300,000 and used 150,500 gallons in production of 18,000 units.
Required:
Calculate the direct materials price and quantity variances and indicate whether each variance is favorable or unfavorable.