The following information is for Pepper Pike Corporation: $\begin{array}{ll}&\text { Direct Material }\
\text { Standard price per unit of input } & \$ 25 \
\text { Actual price p er unit of input } & \$ 24 \
\text { Standard inputs allowed p er unit of output } & 3 \text { pounds } \
\text { Actual units of input } & 8,300 \text { pounds } \
\text { Actual units of output } & 2,770 \text { units }
\end{array}$ * Direct material is measured in pounds is the direct- material usage variance.
A) $8,300 unfavorable
B) $250 unfavorable
C) $8,300 favorable
D) $250 favorable

Question

Quizplus · Accepted Answer

The direct-material usage variance is calculated as (Actual units of input - Standard inputs allowed) x Standard price per unit. Standard inputs allowed = 2,770 units x 3 pounds = 8,310 pounds. Variance = (8,300 - 8,310) x $25 = -10 x $25 = $250 favorable.

The Following Information Is for Pepper Pike Corporation * Direct Material Is Measured in Pounds Is the Direct-