Question

Michael Corporation manufactures railroad cars, which is its only product. The standards for the railroad cars are as follows:

Answer 1

Answer:

Direct material quantity variance= $850 unfavorable

Explanation:

Giving the following information:

Standard tons of direct material (steel) per car 4

Standard cost per ton of steel $ 17.00

During March, the company produced 1,650 cars.

Actual materials purchased and used (tons) 6,650

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= (4*1,650 - 6,650)*17

Direct material quantity variance= $850 unfavorable