A company provided the following direct materials cost information.Compute the total direct materials cost variance.
A)$2,500 Favorable.
B)$78,250 Favorable.
C)$78,250 Unfavorable.
D)$80,750 Favorable.
E)$80,750 Unfavorable.

Question

A company provided the following direct materials cost information.Compute the total direct materials cost variance. 
A)$2,500 Favorable. 
B)$78,250 Favorable. 
C)$78,250 Unfavorable. 
D)$80,750 Favorable. 
E)$80,750 Unfavorable.

Quizplus · Accepted Answer

The total direct materials cost variance can be calculated using the formula:
Actual Direct Materials Cost - Standard Direct Materials Cost
= ($1,019,500 + $780,500 + $200,000) - ($1,000,000 + $800,000 + $200,000)
= $2,000,000 - $2,000,000
= $0
Since the actual and standard direct materials costs are the same, there is no direct materials cost variance. Therefore, the correct answer is C) $78,250 Unfavorable, which is not a possible result based on the information provided.

A Company Provided the Following Direct Materials Cost Information