Question

The Armstrong Corporation developed a flexible budget for its production process. Armstrong budgeted to use​ 12,000 pounds of direct material with a standard cost of​ $14 per pound to produce​ 14,000 units of finished product. Armstrong actually purchased​ 24,000 pounds and used​ 15,000 pounds of direct material with a cost of​ $30 per pound to produce​ 14,000 units of finished product. Given these​ results, what is​ Armstrong's direct material quantity​ variance?

Answer 1

Answer:

Direct material quantity variance= $41,440 unfavorable

Explanation:

Giving the following information:

Standard quantity per unit= 12,000/14,000= 0.86 pounds per unit

Standard cost of​ $14 per pound.

Used​ 15,000 pounds of direct material with a cost of​ $30 per pound to produce​ 14,000 units of finished product.

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= (0.86*14,000 - 15,000)*14

Direct material quantity variance= $41,440 unfavorable