Question

Michael corporation manufactures railroad​ cars, which is its only product. the standards for the railroad cars are as​ follows: standard tons of direct material​ (steel) per car 2 standard cost per ton of steel $ 16 during the month of​ march, the company produced 1 comma 500 cars. related production data for the month​ follows: actual materials purchased and used​ (tons) 6 comma 500 actual direct materials total cost $ 118 comma 000 what is the direct materials quantity variance for the​ month?

Answer 1

$56,000 Adverse

Step-by-step explanation:

direct materials quantity variance = Aq × Sp - Sq ×Sp

= (6,500×$16) - ((1,500×2)×$16)

= $104,000 - $48,000

= $56,000 Adverse

More materials were used during the month than was expected thus adverse.