Question

The following data relate to product no. 89 of Mansion Corporation: Direct material standard: 3 square feet at $2.50 per square foot Direct material purchased: 30,000 square feet at $2.60 per square foot Direct material consumed: 29,200 square feet Manufacturing activity: 9,600 units completed Assume that the company computes variances at the earliest point in time. The direct-material quantity variance is:

Answer 1

Answer:

$2,000 and it is favourable

Explanation:

Direct material quantity variance is defined as the efficiency with which materials are converted into products. It is calculated by multiplying standard price of material by the difference between standard quantity and actual quantity used.

Standard price (SP)= $2.50

Standard quantity (SQ)= 30,000 units

Actual quantity (AQ)= 29,200 units

Material quantity variance = SP * (SQ - AQ)

Material quantity variance= 2.50 * (30,000 - 29,200)

Material quantity variance= $2,000