During September, 40,000 units of product were produced. The standard quantity of material allowed per unit was four pounds at a standard cost of £6.00 per pound. If there was a favourable materials usage variance of £30,000 for April, the actual quantity of materials used must be
A)41,250 pounds.
B)38,750 pounds.
C)165,000 pounds.
D)155,000 pounds.

Question

Quizplus · Accepted Answer

The standard quantity of material allowed for 40,000 units is 160,000 pounds (40,000 units * 4 pounds per unit). A favourable materials usage variance of £30,000 at a standard cost of £6.00 per pound means 5,000 pounds less material was used (since £30,000 / £6.00 per pound = 5,000 pounds). Therefore, the actual quantity of materials used is 160,000 pounds - 5,000 pounds = 155,000 pounds.

During September, 40,000 Units of Product Were Produced