Determining materials price and usage variances Howe Company makes paint that it sells in 1-gallon containers to retail home improvement stores. During 2012, the company planned to make 190,000 gallons of paint. It actually produced 198,000 gallons. The standard and actual quantity and cost of the color pigment for 1 gallon of paint follow.
a. Determine the total flexible budget materials variance for pigment. Indicate whether the variance is favorable or unfavorable.
b. Determine the materials price variance and indicate whether the variance is favorable (F) or unfavorable (U).
c. Determine the materials usage variance and indicate whether the variance is favorable (F) or unfavorable (U).
d. Confirm your answers to Requirements a, b, and c by showing that the sum of the price and usage variances equals the total variance.