Ventura uses a just-in-time (JIT) manufacturing system for all its materials, components, and products. The master budget of the company for June called for use of 11,000 square feet of materials, while the flexible budget for the actual output of the month had 10,000 square feet of materials at a standard cost (SP) of $9.60 per square foot. Company records show that the actual price paid (AP) for the materials used in June was $9.50 per square foot, and that the direct materials purchase-price variance for the month was $1,040.

The actual total quantity of materials purchased during the month, rounded to the nearest whole number, was:
A) 10,000 square feet.
B) 10,400 square feet.
C) 11,000 square feet.
D) 13,840 square feet.
E) 14,880 square feet.

Question

Ventura uses a just-in-time (JIT) manufacturing system for all its materials, components, and products. The master budget of the company for June called for use of 11,000 square feet of materials, while the flexible budget for the actual output of the month had 10,000 square feet of materials at a standard cost (SP) of $9.60 per square foot. Company records show that the actual price paid (AP) for the materials used in June was $9.50 per square foot, and that the direct materials purchase-price variance for the month was $1,040.

The actual total quantity of materials purchased during the month, rounded to the nearest whole number, was:

The actual total quantity of materials purchased during the month, rounded to the nearest whole number, was:  
A) 10,000 square feet.
B) 10,400 square feet.
C) 11,000 square feet.
D) 13,840 square feet.
E) 14,880 square feet.

Quizplus · Accepted Answer

The direct materials purchase-price variance is calculated as (Standard Price - Actual Price) * Actual Quantity Purchased. Given the variance is $1,040 and the difference in price is $0.10 ($9.60 - $9.50), we can calculate the actual quantity purchased as $1,040 / $0.10 = 10,400 square feet.

Ventura Uses a Just-In-Time (JIT) Manufacturing System for All Its