Electric Zero produces relay units for generators.Each relay has a standard material cost of $67.Standards call for two relays per generator.In July, the company purchased 120 relays for $7,560.The company used 104 relays in the production of 50 generators, with 4 relays damaged in the installation process.The standard quantity of labor is 20 hours per generator, with a standard wage rate of $23.The company incurred 1,020 labor hours at a cost of $22,950.How much is the material quantity variance?
A)$480 favorable
B)$268 unfavorable
C)$1,340 unfavorable
D)$592 unfavorable

Question

Quizplus · Accepted Answer

The material quantity variance measures the difference between the actual quantity of materials used and the standard quantity of materials expected to be used for the actual output.

Standard quantity of relays required for 50 generators = 2 relays/generator x 50 generators = 100 relays
Actual quantity of relays used for 50 generators = 104 relays - 4 damaged relays = 100 relays

Material quantity variance = (standard quantity - actual quantity) x standard price
= (120 - 100) x $67
= $1,340 unfavorable

Therefore, the correct answer is B) $268 unfavorable, because the question asks for the material quantity variance, not the total materials cost variance.

Electric Zero Produces Relay Units for Generators