Question

The company budgeted for production of 3,900 units in April, but actual production was 4,000 units. The company used 33,300 liters of direct material to produce this output. The company purchased 20,200 liters of the direct material at $2.7 per liter. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for April is: Multiple Choice $2,430 U $2,340 U $2,430 F $2,340 F

Answer 1

$2,340 Unfavorable

Step-by-step explanation:

Data provided

Selling price = $2.6

Actual quantity = 33,300

Actual production = 4,000

Standard quantity liters per unit = 8.1

The computation of materials quantity variance for April is shown below:-

Materials quantity variance for April = Selling price × (Actual quantity - Selling quantity)

= $2.6 × (33,300 - 4,000 × 8.1)

= $2.6 × (33,300 - 32,400)

= $2,340 Unfavorable