Answer:
The direct material quantity variance is $10,800 favourable. (the options in the question are not correct).
Explanation:
The direct materials quantity variance represents a difference between what was actually produced and the standard or idea that should have been produced especially with regards to the use of direct materials.
To calculate material quantity variance
Step 1:Calculate the Standard Usage of Material
Formula= (Actual Units of Finished goods Purchased x Standard Price of Material per unit)
= 4,000 units x 15 Pounds
= 60,000 Pounds
This means the standard material usage is 60,000 pounds
Step 2: Now calculate the Direct Material Quantity Variance
Formula= (Standard Material Usage - Actual Material Usage) x The Standard Price per Unit of Material
= 60,000 pounds (computed in step 1) - 40,000 pounds (given in the question)
= 20,000 pounds x $0.54
=$10,800
Since the standard Material is higher than the actual material usage, it means that the answer is as follows;
The direct material quantity variance is $10,800 favourable.
Kindly note that the multiple options in the question above are for a different set of figures and a different question.
