Fletcher Company collected the following data regarding production of one of its products. Compute the total direct materials cost variance. $\begin{array}{llr}
\text { Direct materrals standard (6 lbs. @ \$2/1b.) } &\$12& \text { per finished unit } \
\text { Actual direct materials used} &243,000& \text {Ibs. } \
\text {Actual finished units produced } &40,000& \text {units } \
\text { Actual cost of direct materials used } &\$483,570\
\end{array}$

A) $2,430 favorable.
B) $6,000 unfavorable.
C) $6,000 favorable.
D) $3,570 favorable.
E) $3,570 unfavorable.

Question

Fletcher Company collected the following data regarding production of one of its products. Compute the total direct materials cost variance. $\begin{array}{llr}
  \text { Direct materrals standard (6 lbs. @ \$2/1b.) } &\$12& \text { per finished unit } \
 \text {  Actual direct materials used} &243,000& \text {Ibs.  } \
 \text {Actual finished units produced  } &40,000& \text {units  } \
 \text { Actual cost of direct materials used } &\$483,570\
\end{array}$
 
A) $2,430 favorable.
B) $6,000 unfavorable.
C) $6,000 favorable.
D) $3,570 favorable.
E) $3,570 unfavorable.

Quizplus · Accepted Answer

To calculate the direct materials cost variance, we first need to calculate the standard cost of direct materials and the actual cost of direct materials.

Standard Cost of Direct Materials = Standard Price per Unit x Standard Quantity Used
= $7.00 x 20,000 units = $140,000

Actual Cost of Direct Materials = Actual Price per Unit x Actual Quantity Used
= $7.50 x 19,000 units = $142,500

Direct Materials Cost Variance = Actual Cost of Direct Materials - Standard Cost of Direct Materials
= $142,500 - $140,070 = $2,430 unfavorable

Therefore, the correct answer is E, $3,570 unfavorable. It is important to note that the options in the question may have typos, as $2,430 favorable is not possible given the calculations.

Fletcher Company Collected the Following Data Regarding Production of One