Question

A favorable direct materials quantity variance indicates which of the following?A) The actual cost of direct materials was less than the standard cost of direct materials.B) The Standard Quantity (SQ) of direct materials for actual output was less than the Actual Quantity (AQ) of direct materials used.C) The Actual Quantity (AQ) of direct materials used was less than the standard quantity for actual output.D) The Actual Quantity (AQ) of direct materials used was greater than the standard quantity for budgeted output.

Answer 1

Answer:

C) The Actual Quantity (AQ) of direct materials used was less than the standard quantity for actual output

Explanation:

$(standard\:quantity-actual\:quantity) \times standard \: cost = DM \: quantity \: variance$

To be favorable (positive) the difference between standard and actual quantity needs to be positive.

The standard quantity will be calculate doing the standard per unit times the total units produced during the period.

Resuming Standard Quantity would be the expected for the actual output.

(A) refers to prices, this variance is for volume

(B) if standard is less than actual, it means we spend more raw materials than it should be, the variance will be unfavorable

(D) same as B if actual are higher (or standard is lower) then we spend more raw materials than expected, the variance is negative

(C) when actual is less, it means we use less than expected, we saved raw materials, the variance is favorable.