Exeter has a material standard of 1 pound per unit of output. Each pound has a standard price of $26 per pound. During July, Exeter paid $66,100 for 2,475 pounds, which it used to produce 2,350 units. What is the direct materials quantity variance?
A) $1,750 unfavorable
B) $1,300 favorable
C) $3,250 unfavorable
D) $4,550 unfavorable

Question

Quizplus · Accepted Answer

The direct materials quantity variance can be calculated as:

(QS - AQ) x SP

Where QS is the standard quantity of materials for the actual output, AQ is the actual quantity of materials used, and SP is the standard price per unit of materials.

First, we need to find QS. We know that the standard material standard is 1 pound per unit of output, and Exeter produced 2,350 units. Therefore:

QS = 2,350 pounds

Next, we can calculate the actual quantity variance:

(1,000 - 2,475) x $26 = $-48,100

The negative result indicates that the actual quantity used was more than expected, which is unfavorable.

Therefore, the answer is C, $3,250 unfavorable.

Exeter Has a Material Standard of 1 Pound Per Unit