Question

A company developed the following per unit materials standards for its product: 3 pounds of direct materials at $5 per pound. If 12,000 units of product were produced last month and 37,500 pounds of direct materials were used, the direct materials quantity variance was

Answer 1

7,500 Unfavorable

Step-by-step explanation:

Standard rate = $5 per pound

Actual quantity = 37,500 pounds

Direct labor quantity variance:

= Standard rate × (Standard quantity - Actual quantity)

= 5 × [(12,000 units × 3 pounds) - 37,500 pounds]

= 5 × [36,000 pounds - 37,500 pounds]

= 5 × 1,500

= 7,500 Unfavorable

Therefore, the direct materials quantity variance was 7,500 Unfavorable.