The following data is given for the Stringer Company: The direct materials quant

Question

The following data is given for the Stringer Company:

The direct materials quantity variance is

Budgeted production 900 units Actual production   1,056 units Materials:     Standard price per ounce $1.9     Standard ounces per completed unit 12     Actual ounces purchased and used in production 13,052     Actual price paid for materials $26,757 Labor:     Standard hourly labor rate $14.30 per hour     Standard hours allowed per completed unit 5.0     Actual labor hours worked 5,438.4     Actual total labor costs $82,936 Overhead:     Actual and budgeted fixed overhead $1,153,000     Standard variable overhead rate $28.00 per standard labor hour     Actual variable overhead costs $152,275 Overhead is applied on standard labor hours.

Explanation / Answer

Direct materials quantity variance

= ( Standard quantity allowed - Actual Quantity Used ) * Standard Price of a Unit of Direct Material

Standard quantity allowed = Standard ounces per completed unit * Actual production = 12 *  1,056 units = 12,672

Actual Quantity Used = 13,052 (given) ; Standard Price of a Unit of Direct Material = $1.9 (given)

Direct materials quantity variance = ( 13,052 - 12,672 ) * $1.9 = $722 Unfavorable

Explanation : Since actual quantity of direct material used is more than the standard quantity of direct material allowed the resultant direct materials quantity variance is unfavorable

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