Question

Jason Company uses a standard costing system and has set the
following standards for direct materials in order to produce
one unit of its only product:

                    standard quantity    standard price
direct materials         4 pounds        $16 per pound

During September, Jason Company purchased 40,000 pounds of
direct materials and produced 18,000 units. At September 30,
Jason had 11,000 pounds remaining in its direct materials
inventory.

Jason Company reported the following variances for September:

Direct material price variance ........  $42,000 unfavorable
Direct material quantity variance .....  $54,000 unfavorable

Calculate the number of pounds of direct materials in Jason's
September 1 direct materials inventory.

Answer 1

• Step #1: calculate actual quantity used using Material Quantity Variance

Material Quantity variance = (Actual Qty - Std Quantity) x Standard rate
$ 54000 U = (Actual Quantity – [18000 units x 4 pounds]) x $ 16
54000 = (Actual Quantity – 72000) x 16
54000 / 16 = Actual Quantity – 72000
3375 + 72000 = Actual Quantity
75,375 pounds = Actual Qty used.

• Step #2: Answer calculation
  Sept 1 Direct material inventory (or beginning inventory) = Sept 30 inventory + Actual qty used – Units purchased
  = 11000 pounds + 75375 pounds – 40000 pounds
  = 46,375 pounds [Answer]