Question

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

Answer 1

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.