Question

The Armstrong Corporation developed a flexible budget for its production process. Armstrong budgeted to use 16,000 pounds of direct material with a standard cost of $17 per pound to produce 15,000 units of finished product. Armstrong actually purchased 23,000 pounds and used 20,000 pounds of direct material with a cost of $24 per pound to produce 15,000 units of finished product. Given these results, what is Armstrong's direct material quantity variance

A. $168,000 favorable
B. $42,000 favorable
c. $168,000 unfavorable
D. $42,000

Answer 1

$68,000 (Unfavorable)

Step-by-step explanation:

Standard quantity = 16,000

Actual quantity = 20,000

Standard price per unit = $17

Direct material quantity variance:

= (Standard quantity - Actual quantity) × Standard price per unit

= (16,000 - 20,000) × $17

= -4,000 × $17

= -68,000

= $68,000 (Unfavorable)

Therefore, the Armstrong's direct material quantity variance is $68,000 (Unfavorable).