Luma Incorporated has provided the following data concerning one of the products in its standard cost system. The company has reported the following actual results for the product for September:
The raw materials quantity variance for the month is closest to:
A) $69 Favorable
B) $78 Favorable
C) $69 Unfavorable
D) $78 Unfavorable

Question

Luma Incorporated has provided the following data concerning one of the products in its standard cost system.  The company has reported the following actual results for the product for September:
 The raw materials quantity variance for the month is closest to:
A) $69 Favorable 
B) $78 Favorable 
C) $69 Unfavorable 
D) $78 Unfavorable

Quizplus · Accepted Answer

Raw materials quantity variance = actual quantity used - (standard quantity allowed × actual output)
= 4,800 - (4,900 × 1.6)
= 4,800 - 7,840
= $3,040 unfavorable
This means that the company used 1,040 pounds more raw materials than it should have, resulting in an unfavorable variance. Therefore, option C is the closest to the calculated variance.

Luma Incorporated Has Provided the Following Data Concerning One of the Products