Question

# Oxford Co. has a materials standard of 2.1 pounds per unit of output. Each pound has...

Oxford Co. has a materials standard of 2.1 pounds per unit of output. Each pound has a standard price of \$15 per pound. During February, Oxford Co. paid \$57,900 for 4,920 pounds, which were used to produce 2,450 units. What is the direct materials quantity variance?

• \$8,940 favorable

• \$3,375 favorable

• \$1,240 unfavorable

• \$9,700 unfavorable

The correct answer is \$3,375 Favorable.

Supporting calculations:

Direct materials quantity variance = (Standard Quantity of Materials in Pounds - Actual Quantity of Materials in Pounds) * Standard cost per Pound

= ([2.1 pounds per unit * 2,450 units] - 4,920 Pounds) * \$15 per Pound

= (5,145 Pounds - 4,920 Pounds) * \$15 per Pound

= 225 Pounds * \$15 per Pound

= \$3,375 Favorable

Therefore, the material quantity variance is \$3,375 Favorable.

Note: It is favorable because the actual quantity of materials used are less than the standard quantity of materials.

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