Fletcher Company collected the following data regarding production of one of its products.Compute the total direct materials variance.
A)$6,000 favorable.
B)$3,570 unfavorable.
C)$2,430 favorable.
D)$6,000 unfavorable.
E)$3,570 favorablE.Actual units at actual cost = $483,570

Question

Fletcher Company collected the following data regarding production of one of its products.Compute the total direct materials variance. 
A)$6,000 favorable. 
B)$3,570 unfavorable. 
C)$2,430 favorable. 
D)$6,000 unfavorable. 
E)$3,570 favorablE.Actual units at actual cost = $483,570

Quizplus · Accepted Answer

To compute the total direct materials variance, we need to use the formula:

Direct Materials Variance = (Actual Quantity x Actual Price) - (Actual Quantity x Standard Price)

Actual Quantity = 18,500 units
Actual Price = $26 per unit (total actual cost of $483,570 divided by actual units)
Standard Price = $25 per unit

Direct Materials Variance = (18,500 x $26) - (18,500 x $25)
Direct Materials Variance = $481,000 - $464,430
Direct Materials Variance = $16,570 unfavorable

Therefore, the correct answer is B, $3,570 unfavorable (not a favorable variance as the other answer choices suggest).

Fletcher Company Collected the Following Data Regarding Production of One