Devon Company has collected the following data for one of its products: $$\begin{array} { | l | l | }
\hline \text { irect materials standard (3 pounds } @ \$ 1 / \mathrm { lb } \text {.) } & \$ 3 \text { per unit } \
\hline \text { Direct materials flexible budget variance - unfavorable } & \$ 15,500 \
\hline \text { Actual direct materials used } & 101,000 \text { pounds } \
\hline \text { Actual units produced } & 18,000 \text { units } \
\hline
\end{array}$$ What is the direct materials efficiency variance?
A) $18,000 U
B) $47,000 F
C) $47,000 U
D) $18,000 F

Question

Devon Company has collected the following data for one of its products: $$\begin{array} { | l | l | } 
\hline \text { irect materials standard (3 pounds } @ \$ 1 / \mathrm { lb } \text {.) } & \$ 3 \text { per unit } \
\hline \text { Direct materials flexible budget variance - unfavorable } & \$ 15,500 \
\hline \text { Actual direct materials used } & 101,000 \text { pounds } \
\hline \text { Actual units produced } & 18,000 \text { units } \
\hline
\end{array}$$ What is the direct materials efficiency variance?
A) $18,000 U
B) $47,000 F
C) $47,000 U
D) $18,000 F

Quizplus · Accepted Answer

The direct materials efficiency variance is calculated as the difference between the actual quantity of materials used and the standard quantity allowed for the actual production, multiplied by the standard cost per unit of material. The standard quantity allowed for 18,000 units is 3 pounds per unit * 18,000 units = 54,000 pounds. The actual quantity used is 101,000 pounds. The difference is 101,000 - 54,000 = 47,000 pounds. Since more materials were used than the standard allows, this is unfavorable (U). The variance is 47,000 pounds * $1/pound = $47,000 U.

Devon Company Has Collected the Following Data for One of Its