Question

Edgar, Inc. has a materials price standard of $2.00 per pound. Six thousand pounds of materials were purchased at $2.20 a pound. The actual quantity of materials used was 6,000 pounds, although the standard quantity allowed for the output was 5,400 pounds.

Edgar, Inc.'s materials quantity variance is

A) $1,200 U. B) $1,200 F. C) $1,320 F. D) $1,320 U.

Answer 1

Answer:

A) $1,200 Unfavorable

Explanation:

Material Quantity Variance = (Standard Quantity - Actual Quantity) $\times$ Standard Price

Provided information,

Standard Quantity for actual output = 5,400 pounds

Actual Quantity used = 6,000 pounds

Standard Rate of raw material = $2.00 per pound.

Putting values in above,

= (5,400 - 6,000) $\times$ $2.00

= - $1,200

Since value is negative because actual quantity used is more than standard therefore, the variance is unfavorable.

Correct Option is

A) $1,200 Unfavorable