Question

taskmaster enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. taskmaster has established the following standards for the prime costs of one unit of product. standard standardstandard quantity pricecostdirect materials 8pounds $1.80per pound $14.40 direct labor 0.25hour $8.00per hour 2.00 $16.40 during november, taskmaster purchased 160,000 pounds of direct materials at a total cost of $304,000. the total factory wages for november were $42,000, 90% of which were for direct labor. taskmaster manufactured 19,000 units of product during november using 142,500 pounds of direct materials and 5,000 direct labor hours. is the direct materials efficiency variance favorable or unfavorable?

Answer 1

The direct materials efficiency variance for Taskmaster Enterprises is favorable as they used less material than expected for the level of production. They had a variance of $30,780 favorable, since they used 17,100 pounds less material at a standard cost of $1.80 per pound.

Step-by-step explanation:

The direct materials efficiency variance is determined by comparing the actual quantity of material used to produce a unit of product to the standard quantity allowed for that product. In this case, Taskmaster Enterprises used 142,500 pounds of direct materials to produce 19,000 units, while the standard quantity allowed is 8 pounds per unit. The actual quantity used is then compared to the standard quantity expected to be used for the actual production level (19,000 units x 8 pounds/unit = 152,000 pounds).

The formula to calculate the direct materials efficiency variance is (Standard Quantity - Actual Quantity) x Standard Price. Applying this to the Taskmaster scenario: (152,000 pounds - 142,500 pounds) x $1.80 = 17,100 pounds x $1.80 = $30,780. Since the Actual Quantity is less than the Standard Quantity, the variance is favorable, as less material was used than expected for the production level.