Question

Doogan Corporation makes a product with the following standard costs:

Standard Quantity or Hours Standard Price or Rate
Direct materials 2.0 grams $7.00 per gram
Direct labor 1.3 hours $11.00 per hour
Variable overhead 1.3 hours $3.00 per hour

The company produced 5,000 units in January using 10,310 grams of direct material and 2,290 direct labor-hours. During the month, the company purchased 10,880 grams of the direct material at $7.10 per gram. The actual direct labor rate was $11.70 per hour and the actual variable overhead rate was $3.00 per hour. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for January is:

a. $2,201 U
b. $2,201 F
c. $2,170 F
d. $2,170 U

Answer 1

Direct material quantity variance= $2,170 unfavorable

Step-by-step explanation:

To calculate the direct material quantity variance, we need to use the following formula:

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Direct material quantity variance= (2*5,000 - 10,310)*7

Direct material quantity variance= $2,170 unfavorable