Blue Fin Co.produces a product requiring 10 kilograms of material at $1.50 per kilogram.Blue Fin produced 10,000 products during 2016 resulting in a $30,000 unfavourable materials quantity variance.How much direct material did Blue Fin use during 2016?

Question

Quizplus · Accepted Answer

The unfavourable materials quantity variance is calculated as the difference between the actual quantity of materials used and the standard quantity of materials that should have been used. In this case, the unfavourable variance is $30,000, which means that Blue Fin used more materials than it should have. The standard quantity of materials that should have been used is 10 kilograms per product, and Blue Fin produced 10,000 products during 2016. Therefore, the total standard quantity of materials that should have been used is 100,000 kilograms. The actual quantity of materials used is the standard quantity plus the unfavourable variance, which is 100,000 kilograms + $30,000 / $1.50 per kilogram = 120,000 kilograms.