Townsend Company budgeted 2,500 pounds of direct materials costing $32.00 per pound to make 1,250 units of product. The company actually used 2,400 pounds costing $35.50 per pound to make the 1,250 units. What is the direct materials efficiency variance?
A) $3,200 unfavorable
B) $3,550 favorable
C) $3,550 unfavorable
D) $3,200 favorable

Question

Quizplus · Accepted Answer

The direct materials efficiency variance is calculated as (Actual Quantity - Standard Quantity) x Standard Price. Here, (2,400 - 2,500) x $32 = -100 x $32 = $3,200 favorable.

Townsend Company Budgeted 2,500 Pounds of Direct Materials Costing $32