Question

Budgeted production 26,000 units Actual production 27,500 units Materials: Standard price per ounce $6.50 Standard ounces per completed unit 8 Actual ounces purchased and used in production 228,000 Actual price paid for materials $1,504,800 Labor: Standard hourly labor rate $22 per hour Standard hours allowed per completed unit 6.6 Actual labor hours worked 183,000 Actual total labor costs $4,020,000 Overhead: Actual and budgeted fixed overhead $1,029,600 Standard variable overhead rate $24.50 per standard labor hour Actual variable overhead costs $4,520,000 Overhead is applied on standard labor hours. The direct materials quantity variance is

Answer 1

($52,000) Unfavorable

Step-by-step explanation:

The computation of direct materials quantity variance is shown below:-

Direct material quantity variance = (Standard quantity × Standard rate) - (Actual ounces purchased and used in production × Standard rate)

= ($220,000 × $6.50) - ($228,000 × $6.50)

= $1,430,000 - $1,482,000

= ($52,000)Unfavorable

So, for computing the Direct material quantity variance we simply applied the above formula.