Emerald Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor.Emerald uses standard costs to prepare its flexible budget.For the first quarter of 2015,direct material and direct labor standards for one of their popular products were as follows: Direct materials: 1 pound per unit; $12 per pound
Direct labor: 4 hours per unit; $15 per hour
Emerald produced 5,000 units during the quarter.At the end of the quarter,an examination of the materials records showed that the company used 7,000 pounds of materials and actual total material costs were $98,000.
What is the direct materials cost variance?

Question

Quizplus · Accepted Answer

The direct materials cost variance is calculated as the difference between the actual cost and the standard cost of materials used. The standard cost for 7,000 pounds is 7,000 pounds * $12 = $84,000. The actual cost was $98,000. Therefore, the variance is $98,000 - $84,000 = $14,000 Unfavorable.

Emerald Marine Stores Company Manufactures Special Metallic Materials and Decorative