Question

Your Company has a standard costing system. The following data are available for June: * Actual quantity of direct materials purchased: 35,000 pounds * Standard price of direct materials: $4 per pound * Standard quantity per unit: 4.5 pounds * Material price variance: $7,000 favorable * Material quantity variance: $4,200 unfavorable What is the standard quantity of materials for the period?

36,050

33,950

33,250

35,000

Answer 1

Solution:

As given in question,

Actual Direct material = 35,000 pounds

Standard Price of Direct material = $4 per pound

Material quantity variance = $4,200 unfavorable i.e. -$4,200

As we know,

Direct material quantity variance = Standard Price * (Standard Qty - Actual Qty)

Therefore,

Standard Quantity = Actual Quantity + (Material Quantity variance / Standard Price)

Now, susbtituing figures into above formula,

Standard quantity = 35000 Pounds + ( -$4,200 / $4)

= 35,000 Pounds - 1,050 Pounds

= 33,950 Pounds

Therefore, correct option is $33,950.