During September, 40,000 units were produced. The standard quantity of material

Question

During September, 40,000 units were produced. The standard quantity of material allowed per unit was 5 pounds at a standard cost of $2.50 per pound. If there was a favorable usage variance of $25,000 for September, the actual quantity materials used must have been a. 210,000 pounds. b. 190,000 pounds c. 105,000 pounds d. 95,000 pounds Metal Shelf Company's standard cost for raw materials is $4.00 per pound and it is expected that each metal shelf uses two pounds of material. During October Year 2, 25,000 pounds of materials are purchased from a new supplier for $97,000 and 13,000 shelves are produced using 27,000 pounds of materials. Which statement is a possible explanation concerning the direct materials variances? a. The production department had to use more materials since the quality of the 2. b. c. d. materials was inferior. The purchasing manager paid more than expected for materials. Production workers were more efficient than anticipated. The overall materials variance is positive; no further analysis is necessary

Explanation / Answer

Dear student, only one question is allowed at a time. I am answering the first question

1)

Standard quantity of material for actual production

= Actual production x Standard quantity per unit

= 40,000 x 5

= 200,000 pounds

Material usage variance is favorable when the actual quantity of materials used is less than the standard quantity as less quantity of materials is used than the standard quantity

Materials usage variance

= (Standard quantity of materials – Actual quantity of materials) x Standard rate

So, $25,000 =(200,000 – Actual quantity) x $2.50

So, 200,000 – Actual quantity = $25,000 / $2.50

So, Actual quantity = 200,000 – 10,000

= 190,000 pounds

So, as per above calculations, option b is the correct option

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