A company provided the following direct materials cost information. Compute the total direct materials cost variance. $\text {Standard costs assigned:}$
$\begin{array}{llr}
\text {Direct materials standard cost $ (405,000 $ units @\$2.00/unit) } & \$ 810,000\
\text { Actual costs:} &\
\text {Direct Materials costs incurred ( 403,750 units
@\$2.20/unit) } &\$ 888,250
\end{array}$

A) $80,750 Unfavorable.
B) $2,500 Favorable.
C) $80,750 Favorable.
D) $78,250 Favorable.
E) $78,250 Unfavorable.

Question

A company provided the following direct materials cost information. Compute the total direct materials cost variance. $\text {Standard costs assigned:}$
$\begin{array}{llr}
  \text {Direct materials standard cost $ (405,000 $ units @\$2.00/unit)  } & \$ 810,000\
 \text {  Actual costs:} &\
 \text {Direct Materials costs incurred ( 403,750 units
@\$2.20/unit)  } &\$ 888,250 
\end{array}$

A) $80,750 Unfavorable.
B) $2,500 Favorable.
C) $80,750 Favorable.
D) $78,250 Favorable.
E) $78,250 Unfavorable.

Quizplus · Accepted Answer

It is not possible to calculate the total direct materials cost variance from the given information alone. The variance requires a comparison between the actual direct materials cost and a standard or budgeted cost. Without this comparison, we cannot determine whether the variance is favorable or unfavorable. Therefore, the answer is (E) "Cannot be determined from the given information."

A Company Provided the Following Direct Materials Cost Information Standard costs assigned:\text {Standard costs assigned:}Standard costs assigned:

A Company Provided the Following Direct Materials Cost Information $\text {Standard costs assigned:}$