Question

Luma Inc. has provided the following data concerning one of the products in its standard cost system.InputsStandard Quantity or Hours per Unit of OutputStandard Price or RateDirect materials4.8 ounces$6.90 per ounceThe company has reported the following actual results for the product for September:Actual output2,100unitsRaw materials purchased10,500ouncesActual price of raw materials$7.80per ounceActual cost of raw materials purchased$81,900Raw materials used in production10,090ouncesThe raw materials quantity variance for the month is closest to:A) $69 FB) $78 FC) $69 UD) $78 U

Answer 1

Answer: $69 U

Step-by-step explanation:

Firstly, based on the information given, we need to calculate the standard usage which will be:

= Actual output × Standard Qty/hours per unit

= 2100 x 4.8

= 10,080

Therefore, the raw material quantity variance will be:

Raw material usage in production = 10,090 ounces

Standard usage = 10,080

Standard Price = $6.90

Then, the raw material quantity variance will be:

= (Actual usage in units - Standard usage in units) x Standard cost per unit

= (10,090 - 10,080) x 6.9

= 69621 - 69552

= 69U