Question

Google Company reports the following standards for one key product: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 6.3 ounces $ 2.00 per ounce $ 12.60 Direct labor 0.8 hours $ 18.00 per hour $ 14.40 Variable overhead 0.8 hours $ 2.00 per hour $ 1.60 Google reported the following results for this product in February. Originally budgeted output 4,800 units Actual output 5,100 units Raw materials used in production 30,300 ounces Actual direct labor-hours 1,830 hours Purchases of raw materials 34,200 ounces Actual price of raw materials $ 77.10 per ounce Actual direct labor rate $ 67.60 per hour Actual variable overhead rate $ 5.90 per hour Google applies variable overhead on the basis of direct labor-hours. The direct materials quantity variance for February is: Multiple Choice $3,660 F $3,597 F $3,660 U $3,597 U

Answer 1

Answer:

Direct material quantity variance= $3,660 unfavorable

Explanation:

Giving the following information:

Standard Quantity= 6.3 ounces per unit

Standard cost= $2 per ounce

Actual output 5,100 units

Raw materials used in production= 30,300 ounces

To calculate the direct material quantity variance, we need to use the following formula:

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Direct material quantity variance= (5,100*6.3 - 30,300)*2

Direct material quantity variance= $3,660 unfavorable

It is unfavorable because they use more ounces than estimated.