Keegan Inc. budgeted 10,800 pounds of direct materials costing $16.50 per pound to make 5100 units of product. The company actually purchased 10,900 pounds of direct materials costing $25.00 per pound to make the 5100 units. What is the direct materials quantity variance?

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Quizplus · Accepted Answer

The direct materials quantity variance is calculated as (Actual Quantity - Standard Quantity) x Standard Price. Here, the actual quantity used is 10,900 pounds, the standard quantity allowed for 5,100 units is 10,800 pounds, and the standard price is $16.50 per pound. The variance is (10,900 - 10,800) x $16.50 = 100 x $16.50 = $1,650 unfavorable.