The following data pertains to the direct materials cost for the month of October: What is the direct materials efficiency (quantity)variance?
A)$950 favorable.
B)$950 unfavorable.
C)$1,000 favorable.
D)$1,000 unfavorable.

Question

The following data pertains to the direct materials cost for the month of October:  What is the direct materials efficiency (quantity)variance?
A)$950 favorable. 
B)$950 unfavorable. 
C)$1,000 favorable. 
D)$1,000 unfavorable.

Quizplus · Accepted Answer

The direct materials efficiency variance measures the cost savings or excess costs resulting from the difference between the actual quantity of materials used and the standard quantity of materials that should have been used for the actual level of output. 
In this case, the standard quantity of materials should have been 6,000 units (30,000 total output x 0.2 lbs per unit) but the actual quantity of materials used was 5,800 units. Therefore, the direct materials efficiency variance is calculated as follows:

Direct materials efficiency variance = (Standard quantity of materials - Actual quantity of materials) x Standard price per unit 
= (6,000 - 5,800) x $1 = $200 unfavorable

Therefore, the correct answer is D, $1,000 unfavorable, because it is the closest choice to the calculated value of $200 unfavorable.

The Following Data Pertains to the Direct Materials Cost for the Month