Kelly Company gathered the following information for 2009:
$$\begin{array} { | l | c | c | }
\hline & \text { Direct materials } & \
\hline & \text { Product X } & \text { Product } \mathbf { Y } \
\hline \text { Standard quantity per unit } & 3 \text { pounds } & 4 \text { pounds } \
\hline \text { Standard price per unit } & \$ 2.00 \text { per pound } & ? \
\hline \text { Actual quantity used per unit } & ? & 3 \text { pounds } \
\hline \text { Actual price paid for material } & \$ 2.50 \text { per pound } & \$ 5.00 \text { per pound } \
\hline \text { Price variance } & \$ 200 \text { unfavorable } & \$ 450 \text { favorable } \
\hline \text { Efficiency variance } & \$ 400 \text { favorable } & ? \
\hline \text { Flexible budget variance } & ? & \$ 2,100 \text { favorable } \
\hline \text { Actual quantity of production } & 200 \text { units } & 300 \text { units } \
\hline
\end{array}$$ What is the direct materials flexible budget variance for Product X?
A) $200 unfavorable
B) $400 favorable
C) $600 favorable
D) $200 favorable

Question

Kelly Company gathered the following information for 2009:
$$\begin{array} { | l | c | c | } 
\hline & \text { Direct materials } & \
\hline & \text { Product X } & \text { Product } \mathbf { Y } \
\hline \text { Standard quantity per unit } & 3 \text { pounds } & 4 \text { pounds } \
\hline \text { Standard price per unit } & \$ 2.00 \text { per pound } & ? \
\hline \text { Actual quantity used per unit } & ? & 3 \text { pounds } \
\hline \text { Actual price paid for material } & \$ 2.50 \text { per pound } & \$ 5.00 \text { per pound } \
\hline \text { Price variance } & \$ 200 \text { unfavorable } & \$ 450 \text { favorable } \
\hline \text { Efficiency variance } & \$ 400 \text { favorable } & ? \
\hline \text { Flexible budget variance } & ? & \$ 2,100 \text { favorable } \
\hline \text { Actual quantity of production } & 200 \text { units } & 300 \text { units } \
\hline
\end{array}$$ What is the direct materials flexible budget variance for Product X?
A) $200 unfavorable
B) $400 favorable
C) $600 favorable
D) $200 favorable

Quizplus · Accepted Answer

The flexible budget variance is the difference between the actual cost of materials used and the flexible budget cost of materials. The flexible budget cost of materials is the standard cost of materials multiplied by the actual quantity of materials used. For Product X, the standard cost of materials is $2.00 per pound, and the actual quantity of materials used is 200 units * 3 pounds per unit = 600 pounds. Therefore, the flexible budget cost of materials for Product X is $2.00 per pound * 600 pounds = $1,200. The actual cost of materials used for Product X is $2.50 per pound * 600 pounds = $1,500. Therefore, the direct materials flexible budget variance for Product X is $1,500 - $1,200 = $200 favorable.

Kelly Company Gathered the Following Information for 2009 What Is the Direct Materials Flexible Budget Variance for Product