Question

Degregorio Corporation makes a product that uses a material with the following direct material standards: Standard quantity 2.5 kilos per unit Standard price $5 per kilo The company produced 6,600 units in November using 16,850 kilos of the material. During the month, the company purchased 18,900 kilos of the direct material at a total cost of $90,720. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for November is:

Answer 1

Materials quantity variance = $1,750(U)

Step-by-step explanation:

Standard quantity(SQ) = $2.5 * 6600 = 16500 Kg

Standard Price( SP) = $5

Actual quantity(AQ) = 16,850 Kg

Actual Price( AP) = $90,720 / 18,900 kg = $4.8

Materials quantity variance = SP * (SQ - AQ)

Materials quantity variance = 5 * ( 16500 - 16,850 )

Materials quantity variance = 5 * (350)

Materials quantity variance = $1,750(U)