Question

Cost standards for one unit of product no. C77: Direct material 3 pounds at $2.50 per pound $ 7.50 Direct labor 5 hours at $7.20 per hour 36.00 Actual results: Units produced 8,100 units Direct material purchased 26,900 pounds at $2.70 $ 72,630 Direct material used 24,000 pounds at $2.70 64,800 Direct labor 41,000 hours at $7.00 287,000 Assume that the company computes variances at the earliest point in time. The direct-material quantity variance is:

Answer 1

Answer:

$750 Favorable

Explanation:

Direct material 3 pounds at $2.50 per pound = $7.50

Units produced 8,100 units

Direct material used 24,000 pounds at $2.70 = $64,800

Direct material quantity variance:

= (Standard quantity for actual output - Actual quantity used ) × Standard price per unit

= (3 × 8,100 - 24,000) × $2.50

= $750 Favorable