Question

Blaster, Inc., manufactures portable radios. Each radio requires 3 units of Part XBEZ52, which has a standard cost of $1.15 per unit. During May, the company purchased 23,540 units of the part for a total of $28,248. Also during May, the company manufactured 6,780 radios, using 21,140 units of part XBEZ52. The direct materials purchases variance is computed when the materials are purchased. During May, the materials quantity variance for part XBEZ52 was: $920 U $920 F $7,600 F $7,600 U

Answer 1

Actual quantity of material used = 21,140 units

Standard price = $1.15 per unit

Standard quantity = 3 units

Actual output = 6,780 radios

Hence, standard quantity for actual output = 6,780 x 3

= 20,340 units

Direct material quantity variance = Standard price x (Standard quantity - Actual quantity)

= 1.15 x (20,340 - 21,140)     

= $920 (Unfavorable)

First option is the correct option

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