Question

Cost standards for one unit of product no. C77: Direct material 3 pounds at $2.50 per pound $ 7.50 Direct labor 5 hours at $7.50 per hour 37.50 Actual results: Units produced 7,800 units Direct material purchased 26,000 pounds at $2.70 $ 70,200 Direct material used 23,100 pounds at $2.70 62,370 Direct labor 40,100 hours at $7.30 292,730 Use the information to compute the following variances. The direct-material quantity variance is:

Answer 1

Answer:

Usage variance=$750

Explanation:

A material usage variance occurs when the standard quantity required to active a particular level of production is higher or lower than than the actual actual quantity used. A favorable variance would mean than less quantity of materials were used than the standard to achieve a given output level. And an adverse variance would mean the opposite

                                                                                 Pounds

7,800 units should have used ( 7,800× 3)           23,400

but did use                                                               23,100

Usage variance                                                         300      

×    standard price                                                    $2.50    

Usage variance                                                          $750 favorable

Usage variance   =$750