Parallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. The direct materials quantity variance is: Direct materials standard (7 kg. @ $2/kg) $ 14 per finished unit
Actual cost of materials purchased $ 322,500 ^Actual^direct^materials^purchased^and^used^150,000kg

Question

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The direct materials quantity variance is calculated as (Actual Quantity Used - Standard Quantity Allowed) x Standard Price. The standard quantity allowed for 25,000 units is 25,000 x 7 kg = 175,000 kg. The variance is (150,000 kg - 175,000 kg) x $2/kg = $50,000 favorable.

Parallel Enterprises Has Collected the Following Data on One of Its