Royal Company uses a standard costing system.The following information pertains to direct materials for the month of September: Royal Company reports its material price variances at the time of purchase.What is the material usage variance for Royal Company?
$\begin{array}{lr}
\text { Standard price per kilogram } & \$ 17.00 \
\text { Actual purchase price per kilogram } & \$ 16.50 \
\text { Quantity purchased } & 3,100 \mathrm{~kg} \
\text { Quantity used } & 3,950 \mathrm{~kg} \
\text { Standard quantity allowed for actual output } & 4,000 \mathrm{~kg} \
\text { Actual output } & 1,000 \text { units }
\end{array}$
A)$850 (U)
B)$850 (F)
C)$1,950 (F)
D)$2,850 (F)

Question

Quizplus · Accepted Answer

The material usage variance is calculated as (Standard Quantity Allowed for Actual Output - Actual Quantity Used) x Standard Price per Kilogram. Therefore, (4,000 kg - 3,950 kg) x $17.00 = 50 kg x $17.00 = $850 Favorable, since less material was used than the standard allowed.

Royal Company Uses a Standard Costing System A)$850 (U) B)$850 (F) C)$1,950 (F) D)$2,850 (F)

Royal Company Uses a Standard Costing System A)$850 (U)
B)$850 (F)
C)$1,950 (F)
D)$2,850 (F)