Kartman Corporation makes a product with the following standard costs:
In June the company's budgeted production was 3,400 units but the actual production was 3,500 units. The company used 22,150 pounds of the direct material and 2,290 direct labor-hours to produce this output. During the month, the company purchased 25,400 pounds of the direct material at a cost of $170,180. The actual direct labor cost was $57,021 and the actual variable overhead cost was $8,931.
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
-The materials quantity variance for June is:
A) $4,200 F
B) $4,200 U
C) $4,020 U
D) $4,020 F

Question

Kartman Corporation makes a product with the following standard costs:
  In June the company's budgeted production was 3,400 units but the actual production was 3,500 units. The company used 22,150 pounds of the direct material and 2,290 direct labor-hours to produce this output. During the month, the company purchased 25,400 pounds of the direct material at a cost of $170,180. The actual direct labor cost was $57,021 and the actual variable overhead cost was $8,931.
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
-The materials quantity variance for June is:
A) $4,200 F 
B) $4,200 U 
C) $4,020 U 
D) $4,020 F

Quizplus · Accepted Answer

SQ = 3,500 units × 6.5 pounds per unit = 22,750 pounds
Materials quantity variance = (AQ - SQ) × SP
= (22,150 pounds − 22,750 pounds) × $7.00 per pound)
= (−600 pounds) × $7.00 per pound)
= $4,200 F

Kartman Corporation Makes a Product with the Following Standard Costs