Melissa Antiques Company has collected the following data for one of its products: $$\begin{array} { | l | l | }
\hline \text { Direct materials standard (3 pounds @ 1/lb.) } & \$ 3 \text { per unit } \
\hline \text { Direct materials flexible budget variance - unfavorable } & \$ 15,500 \
\hline \text { Actual direct materials used } & 101,000 \text { pounds } \
\hline \text { Actual units produced } & 18,000 \text { units } \
\hline
\end{array}$$ What is the direct materials efficiency variance?

Question

Melissa Antiques Company has collected the following data for one of its products: $$\begin{array} { | l | l | } 
\hline \text { Direct materials standard (3 pounds @ 1/lb.) } & \$ 3 \text { per unit } \
\hline \text { Direct materials flexible budget variance - unfavorable } & \$ 15,500 \
\hline \text { Actual direct materials used } & 101,000 \text { pounds } \
\hline \text { Actual units produced } & 18,000 \text { units } \
\hline
\end{array}$$ What is the direct materials efficiency variance?

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 54,000 pounds (18,000 units x 3 pounds/unit). The variance is (101,000 - 54,000) x $1 = $47,000 Unfavorable.

Melissa Antiques Company Has Collected the Following Data for One