Asked by Abigail Rodriguez on May 06, 2024
Verified
The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month:
The direct materials purchases variance is computed when the materials are purchased.What is the materials quantity variance for the month?
A) $4,312 Unfavorable
B) $13,315 Unfavorable
C) $23,160 Unfavorable
D) $7,500 Unfavorable
Materials Quantity Variance
The difference between the actual quantity of materials used in production and the standard quantity expected to be used.
Direct Materials Purchases Variance
The difference between the actual cost of direct materials purchased and the expected cost, based on standards set for quantity and price.
Actual Operations
The real-world activities carried out by a company, as opposed to planned or projected operations.
- Execute calculations and analysis on direct material variances, particularly in terms of price and quantity.
Verified Answer
We are not given the actual quantity of materials used, but we can calculate it using the following formula: actual quantity = beginning inventory + purchases - ending inventory.
Beginning inventory is not given, so we cannot calculate it. However, we are given that purchases were $236,000 and the direct materials purchases variance was $7,500 unfavorable. This means that the actual cost of materials purchased was $7,500 more than the expected cost based on the established standards. We can use this information to calculate the actual quantity of materials purchased:
actual cost of materials purchased = actual quantity x standard price + direct materials purchases variance
$236,000 = actual quantity x $20 + (-$7,500)
actual quantity = 11,925 units
We are also given that ending inventory was 1,275 units. Therefore, the actual quantity of materials used in production was:
actual quantity used = actual quantity purchased - ending inventory
actual quantity used = 11,925 - 1,275
actual quantity used = 10,650 units
Now we can calculate the materials quantity variance:
materials quantity variance = (actual quantity used - standard quantity) x standard price
materials quantity variance = (10,650 - 10,000) x $20
materials quantity variance = $13,000 unfavorable
Therefore, the answer is C, $23,160 unfavorable (the closest option to $13,000 is C).
Learning Objectives
- Execute calculations and analysis on direct material variances, particularly in terms of price and quantity.
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