Question

Magno Cereal Corporation uses a standard cost system for its "crunchy pickle" cereal. The materials standard for each batch of cereal produced is 1.4 pounds of pickles at a standard cost of $3.00 per pound. During the month of August, Magno purchased 78,000 pounds of pickles at a total cost of $253,500. Magno used all of these pickles to produce 60,000 batches of cereal. What is Magno's materials quantity variance for August?

Answer 1

Answer:

Material Quantity Variance = $18,000 Favorable

Explanation:

Material Quantity Variance = (Standard Quantity - Actual Quantity) $\times$ Standard Rate

Provided information

Here, Standard Rate = $3.00 per pound of raw material

Standard Quantity for Actual Output of 60,000 batches = 60,000 $\times$ 1.4 pound = 84,000

Actual Quantity = 78,000

Material Quantity Variance = (84,000 - 78,000)$\times$ $3.00

= 6,000 $\times$ $3.00 = $18,000

Since standard quantity is more than actual it is a favorable variance.