Question

Oceanside Marine Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Oceanside uses standard costs to prepare its flexible budget. For the first quarter of the​ year, direct materials and direct labor standards for one of their popular products were as​ follows: Direct​ materials: 1 pound per​ unit; $ 11 per pound Direct​ labor: 2 hours per​ unit; $ 18 per hour Oceanside produced 4 comma 000 units during the quarter. At the end of the​ quarter, an examination of the direct materials records showed that the company used 7 comma 000 pounds of direct materials and actual total materials costs were $ 102 comma 900. What is the direct materials cost​ variance? (Round any intermediate calculations to the nearest​ cent, and your final answer to the nearest​ dollar.)

Answer 1

The direct materials cost​ variance is $25,900 unfavorable

Step-by-step explanation:

The formula to compute the direct materials cost​ variance is shown below:

Direct material cost variance = Standard cost - Actual cost

where,

Standard cost = Number of pounds used for direct material × direct material pound per unit

= 7,000 pounds × $11

= $77,000

And, the actual total material cost is $102,900

Now put these values to the above formula

So, the value would equal to

= $77,000 - $102,900

= $25,900 unfavorable