A company developed the following per unit materials standards for its product: 3 pounds of direct materials at $5 per pound. If 12000 units of product were produced last month and 37500 pounds of direct materials were used the direct materials quantity variance was
A) $4500 favorable.
B) $7500 unfavorable.
C) $4500 unfavorable.
D) $7500 favorable.

Question

Quizplus · Accepted Answer

Standard quantity of direct materials for 12,000 units = 3 pounds per unit x 12,000 units = 36,000 pounds
Direct materials quantity variance = Actual quantity of direct materials used - Standard quantity of direct materials allowed x Standard price per pound

= 37,500 pounds - 36,000 pounds x $5 per pound

= $7,500 unfavorable variance.

A Company Developed the Following Per Unit Materials Standards for Its