Question

Parallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. The direct materials quantity variance is?

Direct materals standard (7kg. @ $2/kg): $14 per finished unit

Actual cost of materials purchased: $322,500

Actual direct materials purchased and used: 150,000 kg

Answer 1

Standard Direct Material Cost = $2 per kg
Actual Direct Materials Quantity = 150,000 kg

Standard Direct Materials Quantity = Number of units produced * Standard direct material per unit
Standard Direct Materials Quantity = 25,000 * 7 kg
Standard Direct Materials Quantity = 175,000 kg

Direct Materials Quantity Variance = Standard Direct Material Cost * (Actual Direct Materials Quantity - Standard Direct Materials Quantity)
Direct Materials Quantity Variance = $2.00 * (150,000 - 175,000)
Direct Materials Quantity Variance = $50,000 Favorable