Question

Genent Industries, Inc. (GII), developed standard costs for direct material. GII estimated the following standard costs for one unit of its product.

                                    Standard quantity    Standard price

     Direct materials 0.30 pounds $20 per pound

During July, GII produced 3,000 containers using 1,000 pounds of direct materials at an average cost per pound of $19.

The direct material quantity variance during July is ________.

		$1,000 favorable
		$1,100 unfavorable
		$1,000 unfavorable
		$2,000 unfavorable
		$1,100 favorable

Answer 1

Standard quantity = 0.30 pounds per unit

Standard price = $20 per pound

Actual quantity = 1,000 pounds

Actual output = 3,000 units

Standard quantity for actual output = Standard quantity x Actual output

= 0.30 x3,000

= 900 pounds

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

= 20 x (900-1,000)

= 20 x (-100)

= $2,000 unfavorable

The direct material quantity variance during July is $2,000 unfavorable

Fourth option is correct.

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