Question

The per unit standards for direct materials are 2 gallons at $4 per gallon. Last month, 5,600 gallons of direct materials that actually cost $21,200 were used to produce 3,000 units of product. The direct materials quantity variance for last month was:
$1,200 favorable
$1,600 favorable
$1,600 unfavorable
$2,800 unfavorable

Answer 1

Answer:The answer is $1,600 favourable

Explanation:

Material usage variance is equal to the difference between the standard quantity (SQ) required for actual production and the actual quantity used multiplied by the standard material price (SP) The material usage variance is calculated as

Material usage variance = ( SQ - AQ) SP

In the question, standard price = $4, Standard Quantity = 3000 unit, Actual Quantity = 5,600 gallons

Per unit standard for direct materials = 2 × 3000 = 6,000

Therefore, putting the variables into the formula

(6,000 - 5,600) × 4

= 400 × 4

= 1,600 Favourable

Answer 2

Answer:

$1,600 favorable

Explanation:

The computation of the material quantity variance is shown below:

= Standard Price × (Standard Quantity - Actual Quantity)

where,

Standard quantity = 3,000 units × 2 gallons = 6,000 gallons

And, other items values would remain the same

Now put these values to the above formula

So, the value would be equal to

= $4 × (6,000 gallons - 5,600 gallons)

= $4 × 400 gallons

= $1,600 favorable