Question

LUI Inc. makes a unit called HH. HH has a standard of 3 yards of fabric for each HH. The standard price per yard of fabric is $4. During the period, LUI Inc. planned to make 6,400 units of HH, but actually made 6,000 HHs. LUI Inc. used 14,600 yards of fabric and incurred an actual cost of $64,500 for the fabric. What is the direct material efficiency variance for the current period? Group of answer choices $13,600 Favorable $12,300 Unfavorable $4,800 Unfavorable $6,100 Favorable.

Answer 1

Standard quantity = 3 yards per unit

Standard price = $4 per yard

Actual output = 6,000 units

Actual cost = $64,500

Actual quantity = 14,600 yards

Standard quantity for actual output = Actual output x Standard quantity

= 6,000 x 3

= 18,000 yards

Direct material efficiency variance = Standard price x ( standard quantity - actual quantity)

= 4 x (18,000-14,600)

= 4 x 3,400

= $13,600 favorable

First option is correct.

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