Doogan Corporation makes a product with the following standard costs: The company produced 5,200 units in January using 39,310 grams of direct material and 2,380 direct labor-hours. During the month, the company purchased 44,400 grams of the direct material at $1.70 per gram. The actual direct labor rate was $19.30 per hour and the actual variable overhead rate was $6.80 per hour.The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.The materials quantity variance for January is:
A) $1,411 Favorable
B) $1,660 Favorable
C) $1,660 Unfavorable
D) $1,411 Unfavorable

Question

Doogan Corporation makes a product with the following standard costs:  The company produced 5,200 units in January using 39,310 grams of direct material and 2,380 direct labor-hours. During the month, the company purchased 44,400 grams of the direct material at $1.70 per gram. The actual direct labor rate was $19.30 per hour and the actual variable overhead rate was $6.80 per hour.The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.The materials quantity variance for January is:
A) $1,411 Favorable 
B) $1,660 Favorable 
C) $1,660 Unfavorable 
D) $1,411 Unfavorable

Quizplus · Accepted Answer

Materials quantity variance = (Standard quantity - Actual quantity) x Standard price

Standard quantity = (5,200 units x 7.6 grams per unit) = 39,520 grams
Standard price = $1.60 per gram

Actual quantity = 44,400 grams
Actual cost = $1.70 per gram

Materials quantity variance = (39,520 - 44,400) x $1.60 = $7,872 Unfavorable

Therefore, the answer is C) $1,660 Unfavorable, because the question is asking specifically for the materials quantity variance, not the total materials variance.

Doogan Corporation Makes a Product with the Following Standard Costs