Question

Multiple Choice Question 81

Sheffield Corp. planned to use 1 yard of plastic per unit budgeted at $106 a yard. However, the plastic actually cost $105 per yard. The company actually made 5100 units, although it had planned to make only 4300 units. Total yards used for production were 5160. How much is the total materials variance?

$8480 U

$1200 U

$5160 F

$84800 U

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Answer 1

Ans. Option B $1,200 U

*Working Notes:

*Calculation of total standard cost:

Total standard cost = Standard quantity per unit * Actual production * Standard price

= 1 * 5,100 * $106

= $540,600

*Calculation of total actual cost :

Total actual cost = Actual quantity used * Actual price

= 5,160 * $105

= $541,800

*Calculation of total materials variance:

Total materials variance = Total standard cost - Total actual cost

= $540,600 - $541,800

= -$1,200 (or $1,200 unfavorable)