Scarlett Company has a direct material standard of 3 gallons of input at a cost of $5 per gallon. During July, Scarlett Company purchased and used 7,500 gallons. The direct materials quantity variance was $750 unfavorable and the direct materials price variance was $3,000 favorable. How many units were produced?
A) 2,450 units
B) 2,500 units
C) 7,350 units
D) 7,500 units

Question

Quizplus · Accepted Answer

The direct materials quantity variance is calculated as (Actual quantity - Standard quantity) * Standard price. The actual quantity is 7,500 gallons, the standard quantity is 3 gallons per unit, and the standard price is $5 per gallon. Therefore, the direct materials quantity variance is (7,500 gallons - 3 gallons per unit * x units) * $5 per gallon = $750 unfavorable. Solving for x, we get x = 2,450 units.

Scarlett Company Has a Direct Material Standard of 3 Gallons