Reelmates manufactures fishing poles. In a recent month, the company budgeted production of 2,000 poles. Actual production was 2,200. According to the standard cost card, each pole requires 3 feet of fiberglass rod at a cost of $9 per foot. Reelmates used 6,500 feet of rod at a net cost of $65,000 for the period.
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The material usage variance was:

Question

Quizplus · Accepted Answer

The material usage variance is calculated as (Actual Quantity Used - Standard Quantity Allowed) x Standard Price. The standard quantity allowed for 2,200 poles is 2,200 x 3 = 6,600 feet. The actual quantity used was 6,500 feet. The variance is (6,500 - 6,600) x $9 = -100 x $9 = $900 unfavorable.

Reelmates Manufactures Fishing Poles