Scarlett Company has a direct materials 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 unfavorable, which means that more gallons were used than the standard allowed. The direct materials price variance is favorable, which means that the gallons were purchased at a lower cost than the standard allowed. Therefore, the number of units produced must be less than the number of gallons purchased and used. The correct answer is A) 2,450 units.

Scarlett Company Has a Direct Materials Standard of 3 Gallons