Question

Turrubiates Corporation makes a product that uses a material with the following standards: Standard quantity 6.7...

Turrubiates Corporation makes a product that uses a material with the following standards:

Standard quantity 6.7 liters per unit
Standard price $ 1.20 per liter
Standard cost $ 8.04 per unit

The company budgeted for production of 2,500 units in April, but actual production was 2,600 units. The company used 18,000 liters of direct material to produce this output. The company purchased 18,800 liters of the direct material at $1.3 per liter.

The direct materials purchases variance is computed when the materials are purchased.

The materials quantity variance for April is:

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Answer #1

Answer: $696 Unfavorable

Working:

Material quantity variance = (Standard quantity-actual quantity) Standard rate

                                           = (17,420-18000)*$1.20

Material quantity variance = $696 U

Note:

Standard quantity = Actual units produced *Standard quantity required per unit

= 2,600*6.7lt

=17,420 liters

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