Malkovich Company uses a standard costing system. The following information pertains to direct materials for the month of July: Standard price per lb. $18.00
Actual purchase price per lb. $16.50
Quantity purchased 3,100 lbs.
Quantity used 2,950 lbs.
Standard quantity allowed for actual output 3,000 lbs.
Actual output 1,000 units
Malkovich Company reports its material price variances at the time of purchase. What is the material usage variance for Malkovich Company?
A) $2,850 (F)
B) $1,950 (F)
C) $900 (F)
D) $900 (U)

Question

Quizplus · Accepted Answer

Material usage variance = (Standard quantity allowed for actual output - Quantity used) x Standard price per lb.

Material usage variance = (3,000 - 2,950) x $18.00 = $900 (F)

Malkovich Company Uses a Standard Costing System