Question

Misty McDougall is the manager of the Zachary Bagel Shop. The corporate office had budgeted her store to sell 2,900 ham sandwiches during the week beginning July 17. Each sandwich was expected to contain 7 ounces of ham. During the week of July 17, the store actually sold 3,400 sandwiches and used 24,400 ounces of ham. The standard cost of ham is $0.20 per ounce. The variance report from company headquarters showed an unfavorable materials usage variance of $820. Ms. McDougall thought the variance was too high, but she had no accounting background and did not know how to register a proper objection.

Answer 1

Answer:

The report is incorrect the direct materials quantity variance should be unvaforable for 120 dolllars not 820.

Explanation:

We are going to verify the materials quantity variance:

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

std quantity   23,800.00 (3,400 sandwiches x 7  ounces each)

actual quantity 24,400.00

std cost                  $0.20

$(23,800 - 24,400) \times 0.20 = DM \: quantity \: variance$  

difference       -600.00

We use 600 extra ounces thus, the variance will be negative

We multiply by each ounce standard cost to obtain the quantity variance:

quantity variance  $(120.00)