Caquias Corporation makes a product with the following standard costs: The company reported the following results concerning this product in August. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
-The materials quantity variance for August is:
A)$1,620 F
B)$1,674 F
C)$1,620 U
D)$1,674 U

Question

Caquias Corporation makes a product with the following standard costs:  The company reported the following results concerning this product in August.  The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
-The materials quantity variance for August is:
A)$1,620 F 
B)$1,674 F 
C)$1,620 U 
D)$1,674 U

Quizplus · Accepted Answer

SQ = 2,100 units F1F1F1S1F1F1F10 5.3 kilos = 11,130 kilos
Materials quantity variance = (AQ - SQ)SP
= (10,860 kilos - 11,130 kilos)$6.00 per kilo
= (-270 kilos)$6.00 per kilo = $1,620 F

Caquias Corporation Makes a Product with the Following Standard Costs