Scorpion Production Company planned to use 1 yard of plastic per unit budgeted at $81 a yard. However the plastic actually cost $80 per yard. The company actually made 3900 units although it had planned to make only 3300 units. Total yards used for production were 3960. How much is the total materials variance?
A) $48600 U
B) $4860 U
C) $3960 F
D) $900 U

Question

Quizplus · Accepted Answer

The total materials variance is calculated by comparing the actual cost to the standard cost. The standard cost for the actual production is 3900 units * 1 yard/unit * $81/yard = $315,900. The actual cost is 3960 yards * $80/yard = $316,800. The variance is $315,900 - $316,800 = -$900, indicating a $900 unfavorable variance.

Scorpion Production Company Planned to Use 1 Yard of Plastic