Question

The standard costs and actual costs for direct materials for the manufacture of 2,840 actual units of product are as follows:

Standard Costs
Direct materials	2,840 kilograms @$8.60
Actual Costs
Direct materials	2,900 kilograms @ $8.35

The direct materials quantity variance is

a.$516 unfavorable

b.$516 favorable

c.$413 unfavorable

d.$413 favorable

Answer 1

We know, Direct materials quantity variance = Standard cost of direct materials - Actual quantity of direct materials at standard price = (standard price * standard quantity) - (standard price * actual quantity)

We also know that, standard quantity of materials = 2840 kilograms; Standard cost = $8.60

Actual quantity of materials = 2900 kilograms ; Actual cost = $ 8.35

Thus, from the above formula, Direct materials quantity variance = (2840 * 8.60) - (2900 * 8.60) = $24424 - $24940 = ($516) unfavourable

Hence option (a) is the correct answer.