Jennifer Gibson Company budgeted 4,000 pounds of direct materials costing $7.00 per pound to make 8,000 units of product. The company actually used 4,200 pounds costing $6.50 per pound to make the 8,000 units. What is the direct materials efficiency variance?

Question

Quizplus · Accepted Answer

The direct materials efficiency variance is calculated as (Actual Quantity - Standard Quantity) x Standard Price. Here, it is (4,200 - 4,000) x $7.00 = 200 x $7.00 = $1,400 Unfavorable, because more materials were used than budgeted.

Jennifer Gibson Company Budgeted 4,000 Pounds of Direct Materials Costing