Question

Silmon Corporation makes a product with the following standard costs:

Standard Quantity or Hours Standard Price or Rate
Direct materials 5.1 grams $ 6.00 per gram
Direct labor 0.5 hours $ 13.00 per hour
Variable overhead 0.5 hours $ 2.00 per hour

The company produced 5,300 units in January using 39,410 grams of direct material and 2,390 direct labor-hours. During the month, the company purchased 44,500 grams of the direct material at $1.80 per gram. The actual direct labor rate was $20.30 per hour and the actual variable overhead rate was $6.90 per hour.

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 January is:

Answer 1

Answer:

Material quantity variance =$74, 280  unfavorable        

Explanation:

The material quantity variance occurs when the actual quantity of material used to achieve a given level of output is more or less than the standard quantity expected.

For Silmon Corporation, it can be computed as follows:

Quantity variance is                                                          

                                                                                        Gram

5,300 units should have used ( 5300× 5.1 )                 27,030

but did used                                                                    39,410

Variance in quantity                                                      12,380 Unfavorable

Price per unit                                                               × $6

Material quantity variance                                         $ 74,280. Unfavorable

   

Material quantity variance =$74, 280  unfavorable