Mango cereal corporation uses a standard cost system to collect costs related to

Question

Mango cereal corporation uses a standard cost system to collect costs related to the production of its “crunchy pickle” cereal. The pickle (material) standards for each batch of cereal production are 1.4 pounds of pickles of pickles at standard costs of $ 3.00 per pound. During the month of august, mango purchased 78,000 pounds of pounds at at a total cost of $253,500. Mango used all of these pickles to produce 60,000 batches of cereal. What is Mango’s materials quantity variance for the month of August?
a. $ 19500 UNFAVORABLE
b. $ 54000 UNFAVORABLE
c. $ 18000 FAVORABLE
d. $ 1500 FAVORABLE

Explanation / Answer

Material quantity variance = standard cost * ( actual quanitity used - standard quantity usage per batch * batches produced)

= 3.00 * (78,000 - 60,000 * 1.4) = 18,000, favorable

So the answer is c.

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