Question

Magno Cereal Corporation uses a standard cost system for its "crunchy pickle" cereal. The materials standard for each batch of cereal produced is 1.4 pounds of pickles at a standard cost of $3.00 per pound. During the month of August, Magno purchased 78,000 pounds of pickles at a total cost of $253,500. Magno used all of these pickles to produce 60,000 batches of cereal. What is Magno's materials quantity variance for August? Question 8 options: A) $1,500 Unfavorable B) $54,000 Unfavorable C) $19,500 Unfavorable D) $18,000 Favorable

Answer 1

Answer:

D) $18,000 Favorable

Explanation:

The computation of the material quantity variance is given below:

Material quantity variance is

= standard cost × ( actual quantity used - standard quantity usage per batch × batches produced)

= $3.00 × (78,000 - 60,000 × 1.4)

= $18,000, favorable

hence, the material quantity variance is $18,000 favorable