Efficient Corporation uses a standard cost system.The following information was provided for the period that just ended:

-The direct materials cost variance is
A)$1,125 favorable.
B)$4,750 unfavorable.
C)$6,000 unfavorable.
D)$7,125 unfavorable.

Question

Efficient Corporation uses a standard cost system.The following information was provided for the period that just ended:
 
-The direct materials cost variance is
A)$1,125 favorable. 
B)$4,750 unfavorable. 
C)$6,000 unfavorable. 
D)$7,125 unfavorable.

Quizplus · Accepted Answer

To calculate the direct materials cost variance, we need to find the difference between actual cost and the standard cost for the actual quantity used.

Actual cost = actual quantity used x actual price 
= 12,000 x $3.50 
= $42,000

Standard cost = actual quantity used x standard price 
= 12,000 x $3.00 
= $36,000

Direct materials cost variance = actual cost - standard cost 
= $42,000 - $36,000 
= $6,000 unfavorable

Therefore, the correct answer is B.

Efficient Corporation Uses a Standard Cost System