Question

Assume that the standard cost to make one unit of product includes 12 units of raw materials at a price of $2 per unit. In Aug, 17,000 units of raw materials were purchased for $50,800, and 12,300 units of raw materials were used to produce 1,000 units of finished product.
What is the materials quantity variance?
a) $1,200 (U)
b) $ 600 (U)
c) $ 600 (F)
d) $1,800 (U)

Answer 1

Answer:

Direct material quantity variance= $600 unfavorable

Explanation:

Giving the following information:

Standard= 12 units of raw materials for $2 per unit.

Actual: 12,300 units of raw materials were used to produce 1,000 units.

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

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

Standard quantity= 12*1,000= 12,000

Direct material quantity variance= (12,000 - 12,300)*2

Direct material quantity variance= $600 unfavorable