Bulluck Corporation makes a product with the following standard costs: The company reported the following results concerning this product in July.
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
The materials quantity variance for July is:
A) $870 U
B) $1,044 U
C) $870 F
D) $1,044 F

Question

Bulluck Corporation makes a product with the following standard costs:  The company reported the following results concerning this product in July.
 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
The materials quantity variance for July is:
A) $870 U 
B) $1,044 U 
C) $870 F 
D) $1,044 F

Quizplus · Accepted Answer

SQ = 3,000 units × 3.5 grams per unit = 10,500 grams
Materials quantity variance = (AQ - SQ) × SP
= (11,370 grams − 10,500 grams) × $1.00 per gram
= (870 grams) × $1.00 per gram
= $870 U

Bulluck Corporation Makes a Product with the Following Standard Costs