Question

You are given the following budgeted information:

Direct materials: $5.00 per lb, 2 lbs. per unit
Direct Labor $15 per hour, 1 hr to make a unit

The company purchased 2,000 lbs. of material for $9,000 and used 1,800 lbs. to make 950 units. The direct materials quantity variance is:
A. $450F
B. $900 F
C. $500 F
D. It cannot be determined with the info given

Answer 1

The direct materials quantity variance is calculated by finding the difference between the standard quantity of materials for actual production and the actual quantity used, then multiplying by the standard cost per pound. The variance in this case is $500 favorable because less material was used than expected.

"The correct option is approximately option A"

Step-by-step explanation:

The question is asking to calculate the direct materials quantity variance, which is the difference between the standard quantity of materials that should have been used for the actual production and the actual quantity used, multiplied by the standard cost per unit. To find the direct materials quantity variance, we use the following steps:

1. Calculate the standard quantity of materials for actual production: 950 units × 2 lbs. per unit = 1,900 lbs.
2. Find the actual quantity of materials used: 1,800 lbs.
3. Compute the difference between standard and actual quantity: 1,900 lbs. - 1,800 lbs. = 100 lbs. favorable.
4. Multiply the difference by the standard cost per pound: 100 lbs. × $5.00 per lb = $500.

Therefore, the direct materials quantity variance is $500 favorable (F). The variance is favorable because the actual quantity of materials used is less than the standard quantity expected to be used.