Scotch Brand Products produces packaging tape and has determined the following to be its standard cost of producing one case of budget packaging tape: $$\begin{array} { l r }
\text { Material (3.50 ounces at } \$ 1.30 \text { per ounce) } & \$ 4.55 \
\text { Labor (0.30 hour at } \$ 12.00 \text { per hour) } & 3.60 \
\text { Overhead } & 2.20 \
\text { Total } & \$ 10.35
\end{array}$$ At the start of 2017, Scotch Brand planned to produce 80,000 cases of tape during the year.Overhead is allocated based on the number of cases of tape produced.Annual fixed overhead is budgeted at $56,000 and variable overhead costs are budgeted at $1.50 per case.The following information summarizes the results for 2017:
-Actual production, 75,000 cases
-Purchased 275,000 ounces of material at a total cost of $343,750
-Used 266,250 ounces of material in production
-Employees worked 22,000 hours, total labor cost $275,000
-Actual overhead incurred, $175,000
How much is the material quantity variance for 2017?
A)$4,875 unfavorable
B)$8,875 favorable
C)$$14,750 favorable
D)$13,750 favorable

Question

Scotch Brand Products produces packaging tape and has determined the following to be its standard cost of producing one case of budget packaging tape: $$\begin{array} { l r } 
\text { Material (3.50 ounces at } \$ 1.30 \text { per ounce) } & \$ 4.55 \
\text { Labor (0.30 hour at } \$ 12.00 \text { per hour) } & 3.60 \
\text { Overhead } & 2.20 \
\text { Total } & \$ 10.35
\end{array}$$ At the start of 2017, Scotch Brand planned to produce 80,000 cases of tape during the year.Overhead is allocated based on the number of cases of tape produced.Annual fixed overhead is budgeted at $56,000 and variable overhead costs are budgeted at $1.50 per case.The following information summarizes the results for 2017:
-Actual production, 75,000 cases
-Purchased 275,000 ounces of material at a total cost of $343,750
-Used 266,250 ounces of material in production
-Employees worked 22,000 hours, total labor cost $275,000
-Actual overhead incurred, $175,000
How much is the material quantity variance for 2017?
A)$4,875 unfavorable
B)$8,875 favorable
C)$$14,750 favorable
D)$13,750 favorable

Quizplus · Accepted Answer

The material quantity variance is calculated as follows:Standard quantity of material = 3.50 ounces per case x 75,000 cases = 262,500 ouncesActual quantity of material used = 266,250 ouncesMaterial quantity variance = (Actual quantity - Standard quantity) x Standard price= (266,250 ounces - 262,500 ounces) x $1.30 per ounce= 3,750 ounces x $1.30 per ounce= $4,875 unfavorable

Scotch Brand Products Produces Packaging Tape and Has Determined the Following