Michael Corporation manufactures railroad cars, which is its only product. The standards for the railroad cars are as follows: During the month of March, the company produced 1750 cars. Related production data for the month follows:
What is the direct materials quantity variance for the month?
A)$15,600 favorable
B)$15,600 unfavorable
C)$36,400 favorable
D)$36,400 unfavorable

Question

Michael Corporation manufactures railroad cars, which is its only product. The standards for the railroad cars are as follows:  During the month of March, the company produced 1750 cars. Related production data for the month follows:
 What is the direct materials quantity variance for the month?
A)$15,600 favorable 
B)$15,600 unfavorable 
C)$36,400 favorable 
D)$36,400 unfavorable

Quizplus · Accepted Answer

Direct materials quantity variance = (Standard quantity for actual output - Actual quantity used) x Standard price per unit
Standard quantity for actual output = Standard quantity per unit x Actual output
= 500 lbs x 1750 units
= 875,000 lbs
Actual quantity used = 910,000 lbs
Therefore, Direct materials quantity variance = (875,000 - 910,000) x $0.18
= $15,600 unfavorable.

Michael Corporation Manufactures Railroad Cars, Which Is Its Only Product