Question

A manufacturing company that produces trivets has established the following standards for the current year: Standard price per pound $3.00 Standard material usage per trivet 2.00 During April, the company purchased 10,000 pounds of material for $33,000 and used 9,400 pounds to produce 4,500 trivets. Four thousand trivets were sold during April. What amount should be reported as the materials' quantity (usage) variance?

Answer 1

Answer:

The answer is $1,200 should be recorded as the materials' quantity (usage) unfavorable variance.

Explanation:

Please find the below for detailed explanations and calculations:

The variance is equal to: Actual produced amount x Standard usage of material x standard cost - Actual produce amount x Actual usage of material x standard cost = 4,500 x 2 x 3 - 4,500 x 9400/4500 x 3 = $(1,200)

Due to the actual usage of material is higher than the budget material usage, the variance of $1,200 is unfavorable.