A company uses the following standard costs to produce a single unit of output.

Question

A company uses the following standard costs to produce a single unit of output.

During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the direct materials quantity variance for the month was:

$5,800 favorable

$5,800 unfavorable

$1,800 favorable

$1,800 unfavorable

$1,000 favorable

Direct materials 6 pounds at $0.90 per pound = $5.40 Direct labor 0.5 hour at $12.00 per hour = $6.00 Manufacturing overhead 0.5 hour at $4.80 per hour = $2.40

Explanation / Answer

All Amounts in $ Direct Materials Quantity Variance = (Standard Quantity of Materials used - Actual Quantity of Materials used) X Standard rate per unit =((10,000 X 6) - 58,000) X $ 0.90 = 1800 Favorable

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