Question

Electric Zero produces relay units for generators. Each relay has a standard material cost of $67. Standards call for two relays per generator. In July, the company purchased 120 relays for $7,560. The company used 104 relays in the production of 50 generators, with 4 relays damaged in the installation process. The standard quantity of labor is 20 hours per generator, with a standard wage rate of $23. The company incurred 1,020 labor hours at a cost of $22,950. How much is the material quantity variance?

Answer 1

Answer:

$268 unfavorable

Explanation:

Given:

Standard material cost of each relay = $67

The number of relays purchased = 120

Cost of 120 relays = $7,560

Number of relays used for 50 generators = 104

Number of damaged relays = 4

Thus, the working relays = 104 - 4 = 100

Now,

Material Quantity Variance is given as:

= Standard Price × ( Standard Quantity - Actual Quantity)

or

Standard Quantity of relays for 50 generators = 50 × 2 = 100

therefore,

Material Quantity variance = 67 × ( 100 - 104 )  = - $268

Here, the negative sign depicts the unfavorable

Hence,

the material quantity variance is $268 unfavorable