Question

A company planned to use 1 yard of plastic per unit budgeted at $81 a yard. However, the plastic actually cost $80 per yard. The company made 4,200 units. Total yards used for production were 3,960. What is the material quantity variance?

Answer 1

Answer:

$19,200 Unfavorable since more material is used.

Explanation:

The company made 4,200 units, so 4,200 yards of material should be used (based on initial plan of using 1 yard per unit), but they actually used 3,960 yards.

Therefore,

Materials quantity variance:

= (Material should be used - Material they actually used) × Plastic actual cost per yard

= (4,200 - 3,960) × $80

= 240 × $80

= $19,200 Unfavorable since more material is used.