During April, 80,000 units of product were produced. The standard quantity of material allowed per unit was two pounds at a standard cost of £5 per pound. If there was a favorable materials usage variance of £40,000 for April, the actual quantity of materials used must have been
A) 168,000 pounds
B) 152,000 pounds
C) 84,000 pounds
D) 76,000 pounds

Question

Quizplus · Accepted Answer

The standard quantity of material for 80,000 units is 160,000 pounds (80,000 units * 2 pounds per unit). A favorable variance of £40,000 at a standard cost of £5 per pound means 8,000 pounds less material was used (since £40,000 / £5 per pound = 8,000 pounds). Therefore, the actual quantity used was 160,000 pounds - 8,000 pounds = 152,000 pounds.

During April, 80,000 Units of Product Were Produced