Billey Corp. produced 5,000 units this year. The standard quantity of raw materials per unit was 2 kilograms, and the standard price per kilogram was $3. The company actually used 2.1 kilograms per unit, and paid $3.10 per kilogram. The raw materials usage variance was

Question

Quizplus · Accepted Answer

Standard quantity of raw materials per unit = 2 kg
Actual quantity of raw materials per unit = 2.1 kg
Standard price per kilogram = $3
Actual price per kilogram = $3.10

Raw materials usage variance = (Standard quantity - Actual quantity) x Actual price
= (2 kg - 2.1 kg) x $3.10
= -0.1 kg x $3.10
= -$0.31 per unit

Total raw materials usage variance = -$0.31 x 5,000 units
= -$1,550 unfavorable variance

Therefore, the correct answer is B) $1,500 unfavorable.