Question

Roberts Company uses a standard costing system. The following information pertains to direct materials for the month of July: Standard price per lb. $18.00 Actual purchase price per lb. $16.50 Quantity purchased 3,100 lbs. Quantity used 2,950 lbs. Standard quantity allowed for actual output 3,000 lbs. Actual output 1,000 units Roberts Company reports its material price variances at the time of purchase. What is the material usage variance for Roberts Company?

Answer 1

$900 favorable variance

Step-by-step explanation:

To calculate the material usage variance we must use the following formula:

material usage variance = (actual quantity - standard quantity) x standard price

material usage variance = (2,950 lbs. - 3,000 lbs.) x $18 = 50 lbs. x $18 = $900

since the variance is positive, it is a favorable variance