Question

Summerlin Company budgeted 4,000 pounds of material costing $5.00 per pound to produce 2,000 units. The company actually used 4,500 pounds that cost $5.10 per pound to produce 2,000 units. What is the direct materials quantity variance?
a. $400 unfavorable.
b. $450 unfavorable.
c. $2,500 unfavorable.
d. $2,550 unfavorable.
e. $2,950 unfavorable.

Answer 1

Answer:

e. $2,950 unfavorable

Explanation:

Since the units are the same, then we will work with the costs and pounds.

Standard

4,000 pounds × $5 per pounds

(4,000 × $5) = $20,000

Actual

4,500 pounds x costs per pound $5.10

(4,500 × $5.10) = $22,950

Therefore,

Standard - Actual

$20,000 - $22,950 = $2,950

Therefore, the direct materials quantity variance is $2,950 unfavorable since actual cost of materials expended is more that the standard cost of materials.