Question

The management of Guardian Fire Alarms has calculated the following​ variances: Direct materials cost variance $ 9 comma 000 U Direct materials efficiency variance 36 comma 000 F Direct labor cost variance 16 comma 500 F Direct labor efficiency variance 12 comma 000 U Total variable overhead variance 7 comma 000 F Total fixed overhead variance 3 comma 000 F What is the total direct materials variance of the​ company?

Answer 1

Answer:

= $27,000 favorable

Explanation:

Direct material price (cost) occurs when the actual quantity of materials are purchased at an actual price per unit higher or lower than the standard price.

Direct material efficiency( usage variance) occurs when the actual quantity used used to achieve a given output is more or less than the standard quantity expected to achieve same.

The Direct material total cost variance is the sum of the direct material price variance and the direct material usage variance.

So we can determine the total direct materials variance of the​ company as follows:

= 9,000 unfavorable + $36,000 favorable

= $27,000 favorable