Assume that the standard cost to make one unit of product includes 10 units of raw materials at a standard price of $3 per unit. In July, 20,800 units of raw materials that cost $2.96 each were used to produce 2,000 units of finished product. What is the materials quantity variance?

Question

Quizplus · Accepted Answer

The materials quantity variance is calculated as (Actual quantity used - Standard quantity allowed) x Standard price. In this case, the actual quantity used is 20,800 units, the standard quantity allowed is 2,000 units x 10 units per unit = 20,000 units, and the standard price is $3 per unit. Therefore, the materials quantity variance is (20,800 - 20,000) x $3 = $2,400 unfavorable.

Assume That the Standard Cost to Make One Unit of Product