Aqua Company produces aquariums. During the year, 150,000 aquariums were produced. Materials and labour standards for producing the aquariums are as follows:
Aqua purchased and used 310,000 sheets of glass at $1.50 per sheet, and its actual labour hours were 435,000 hours at a wage rate of $8.50 per hour.
$\begin{array}{lll}
\text {Direct materials ( 2 sheets of glass @$ \$ 2 $ per sheet) }&\$ 4\
\text { Direct labour (3 hours $ @ \$ 8 $ per hour)}&24\
\end{array}$

-Refer to the Figure.What is the materials usage variance?
A)$15,000 U
B)$20,000 U
C)$135,000 U
D)$170,000 U

Question

Aqua Company produces aquariums. During the year, 150,000 aquariums were produced. Materials and labour standards for producing the aquariums are as follows:
Aqua purchased and used 310,000 sheets of glass at $1.50 per sheet, and its actual labour hours were 435,000 hours at a wage rate of $8.50 per hour.
 $\begin{array}{lll}
\text {Direct materials ( 2 sheets of glass @$ \$ 2 $ per sheet) }&\$ 4\
\text { Direct labour (3 hours $ @ \$ 8 $ per hour)}&24\
\end{array}$

-Refer to the Figure.What is the materials usage variance?
A)$15,000 U
B)$20,000 U
C)$135,000 U
D)$170,000 U

Quizplus · Accepted Answer

The materials usage variance is calculated as (Actual Quantity - Standard Quantity) x Standard Price. The standard quantity for 150,000 aquariums is 300,000 sheets (150,000 x 2). The actual quantity used was 310,000 sheets. The standard price is $2 per sheet. Thus, the variance is (310,000 - 300,000) x $2 = $20,000 Unfavorable.

Aqua Company Produces Aquariums -Refer to the Figure