Melissa Company has collected the following data for one of its products: $\begin{array}{|l|r|}
\hline\text { Direct materials standard (5 pounds @ } \$ 1 / \mathrm{lb} \text {.) } & \$ 5 \text { per finished good } \
\hline \text { Direct materials flexible budget variance-unfavorable } & \$ 14,000 \
\hline \text { Actual direct materials used } & 100,000 \text { pounds } \
\hline \text { Actual finished goods produced } & 18,000 \text { units }\\hline
\end{array}$ How much is the direct materials efficiency variance?
A) $18,000 U
B) $10,000 F
C) $10,000 U
D) $18,000 F

Question

Quizplus · Accepted Answer

The direct materials efficiency variance is calculated as (Actual Quantity - Standard Quantity) x Standard Price. The standard quantity for 18,000 units is 90,000 pounds (18,000 units x 5 pounds/unit). The variance is (100,000 - 90,000) x $1 = $10,000 U.

Melissa Company Has Collected the Following Data for One of Its