Tower Company planned to produce 3,000 units of its single product, Titactium, during November. The standards for one unit of Titactium specify six pounds of materials at $0.30 per pound. Actual production in November was 3,100 units of Titactium. There was an unfavorable materials price variance of $380 and a favorable materials quantity variance of $120. Based on these variances, one could conclude that:
A)more materials were purchased than were used.
B)more materials were used than were purchased.
C)the actual cost per pound for materials was less than the standard cost per pound.
D)the actual usage of materials was less than the standard alloweD.Materials quantity variance = (AQ - SQ) SP

Question

Quizplus · Accepted Answer

The favorable materials quantity variance of $120 means that less material was used than was allowed by the standard (i.e. the actual quantity used was less than the standard quantity). The unfavorable materials price variance of $380 means that the actual cost per pound of materials was higher than the standard cost per pound. Therefore, the only possible conclusion is that the actual usage of materials was less than the standard allowed. Option D is the correct answer.

Tower Company Planned to Produce 3,000 Units of Its Single