Walnut Company uses a standard costing system. The information below is for the
ID: 2562600 • Letter: W
Question
Walnut Company uses a standard costing system. The information below is for the first qerof th Standard Quantity of material allowed per unit Standard Price of Material Budgeted units to be produced Beginning Raw Materials Inventory 7 lbs. s 17.70 per lb. 600 units 0 lbs. At the end of the period, results were as follows: Actual Materials Purchased Actual Cost of Materials Purchased Ending Raw Materials Inventory Actual Units Produced 6,200 lbs. S 113,460 500 lbs. 660 units 3 What was the materials quantity variance for the month? A. S 26,550 Unfavorable B. S 27,966 Unfavorable $ 19,116 Unfavorable D. S 19,764 Unfavorable E. None of the aboveExplanation / Answer
Material Quantity Variance is calculated by the formula:
= (Standard Quantity required for producing the actual number of units - Actual quantity of raw materials used in production of actual units) x Standard price per unit of raw material.
Actual number of units produced = 660 units.
Standard quantity per unit of finished product = 7lbs.
Therefore, Standard quantity of raw materials required for actual units = 660 x 7lbs = 4620 lbs.
Actual quantity of raw materials used = Opening Raw material inventory + Raw material purchased – closing inventory of Raw materials.
= 0 + 6200lbs – 500lbs. = 5700lbs.
Standard Price per unit of Raw Material = $17.70 lbs.
Putting the figures into above mentioned formula:
Material Quantity Variance = (4620-5700) x $17.70 = (-1080) x $17.70 = -19116.
Negative sign represents unfavorable variance. Therefore, the answer is $19116 Unfavorable.
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