MyTime, Inc., produces electronics timepieces. The company uses mini-LCD displays for its products. Each timepiece uses one display. The company produced 540 timepieces during October. However, due to LCD defects, the company actually used 570 LCD displays during October. Each display has a standard cost of $8.60. Five hundred seventy LCD displays were purchased for October production at a cost of $4,560.
Determine the price variance, quantity variance, and total direct materials cost variance for October.
 

Price variance:

Direct Materials Price Variance = (Actual Price – Standard Price)

                                                               × Actual Quantity

Direct Materials Price Variance = ($8.00 per unit* – $8.60 per unit) × 570

Direct Materials Price Variance = – $342 Favorable Variance

*$4,560/570 units = $8 per unit

Quantity variance:

Direct Materials Quantity Variance = (Actual Quantity – Standard Quantity) ×

                                                                       Standard Price

Direct Materials Quantity Variance = (570 units – 540 units) × $8.60 per unit

Direct Materials Quantity Variance = $258 Unfavorable Variance

Total direct materials cost variance:

Direct Materials Cost Variance =          Direct Materials Price Variance +

                                                               Direct Materials Quantity Variance

Direct Materials Cost Variance = – $342 + $258

Direct Materials Cost Variance = – $84 Favorable Variance