5. Fraize Corporation makes a product that uses a material with the quantity sta

Question

5. Fraize Corporation makes a product that uses a material with the quantity standard of 9.5 kilos per unit of output and the price standard of $4.00 per kilo. In July the company produced 7,000 units using 68,850 kilos of the direct material. During the month the company purchased 73,600 kilos of the direct material at $3.70 per kilo. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for July is: A. $9,400 U B. $8,695 U C. $9,400 F D. $8,695 F

Explanation / Answer

Standard Quantity for Actual Output = 7000Units * (9.50 Kg per unit of output) = 66,500 kgs Material Quantity Variance = (Standard Quantity for Actual Output - Actual Quantity Used) * Standard Price per Kg = (66,500 - 68,850) * 4 = $9,400 (U)

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