Question

Underwood Corporation makes a product that uses a material with the quantity standard of 7.3 grams per unit of output and the price standard of $6.00 per gram. In January the company produced 3,400 units using 24,870 grams of the direct material. During the month the company purchased 27,400 grams of the direct material at $6.10 per gram. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for January is:

Answer 1

-$300 Unfavorable

Step-by-step explanation:

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

For computing the materials quantity variance for January first we need to find out the Standard quantity of material which is here below:-

Standard quantity of material for 3400 units will be: 3400 × 7.3

= 24,820 grams

Material Quantity Variance = Standard Price × (Standard Quantity - Actual Quantity)

$6.00 × (24,820 grams - 24,870 grams)

= $ 6 × (-50 grams)

= -$300 Unfavorable

Therefore we have applied the above formula.