If the direct materials purchased costs $200 per unit while the standard price for direct materials is $180, and the total direct material used is 1,000 units while the standard direct materials allowed for actual production is 980 units,
A)the direct materials quantity variance will be favorable.
B)the direct materials quantity variance will be unfavorable.
C)the direct materials price variance will be favorable.
D)there will be no direct materials price variance.

Question

Quizplus · Accepted Answer

The direct materials quantity variance is calculated as follows: 
Actual Quantity Used - Standard Quantity Allowed 
= 1000 - 980 
= 20 units unfavorable 
Since the actual quantity used is higher than the standard quantity allowed, the variance is unfavorable. The direct materials price variance is calculated as follows: 
Actual Price - Standard Price 
= $200 - $180 
= $20 favorable 
Since the actual price is higher than the standard price, the variance is favorable. However, the question only asks about the direct materials quantity variance, so the answer is B.

If the Direct Materials Purchased Costs $200 Per Unit While