Malkovich Company uses a standard costing system. The following information pertains to direct materials for the month of July: Malkovich Company reports its material price variances at the time of purchase.
What is the material usage variance for Malkovich Company?
A) $2,850 (
B) $1,950 (
C) $900 (
D) $900 (

Question

Malkovich Company uses a standard costing system. The following information pertains to direct materials for the month of July:  Malkovich Company reports its material price variances at the time of purchase.
What is the material usage variance for Malkovich Company?
A) $2,850 (
B) $1,950 (
C) $900 (
D) $900 (

Quizplus · Accepted Answer

Material usage variance = (Actual quantity used - Standard quantity allowed) x Standard price

= (7,000 lbs - 6,500 lbs) x $0.15

= $75 x 12 = $900 (F)

(Note: The actual quantity used is the sum of the beginning inventory, purchases, and ending inventory.)

Malkovich Company Uses a Standard Costing System