Question

The standard amount of materials required to make one unit of Product Q is 9 pounds. Tusa's static budget showed a planned production of 20,000 units. During the period the company actually produced 20,100 units of product. The actual amount of materials used averaged 9.1 pounds per unit. The standard price of material is $1 per pound. Based on this information, the materials usage variance was: Multiple Choice $2,000 favorable. $2,000 unfavorable. $2,010 favorable.

Answer 1

$2,010 Unfavorable

As this is not in option, but correct answer is this only.

Step-by-step explanation:

Material Usage variance = (Standard Quantity - Actual Quantity)
`*` Standard Price

Standard Quantity for actual output of 20,100 units = 20,100
`*` 9 = 180,900 pounds

Actual Quantity = 20,100
`*` 9.1 = 182,910 pounds

Material Usage Variance = (180,900 - 182,910)
`*` $1

= - $2,010

since the amount is negative because actual usage was more than standard usage, the variance is unfavorable.