Melissa Antiques Company has collected the following data for one of its products: $$\begin{array} { | l | r | }
\hline \text { irect materials standard (4 pounds @ 1//b.) } & \$ 4 \text { per unit } \
\hline \text { Direct materials flexible budget variance - unfavorable } & \$ 14,500 \
\hline \text { Actual direct materials used } & 100,000 \text { pounds } \
\hline \text { Actual units produced } & 19,000 \text { units } \
\hline
\end{array}$$ What is the direct materials efficiency variance?
A) $19,000 U
B) $24,000 F
C) $24,000 U
D) $19,000 F

Question

Melissa Antiques Company has collected the following data for one of its products: $$\begin{array} { | l | r | } 
\hline \text { irect materials standard (4 pounds @ 1//b.) } & \$ 4 \text { per unit } \
\hline \text { Direct materials flexible budget variance - unfavorable } & \$ 14,500 \
\hline \text { Actual direct materials used } & 100,000 \text { pounds } \
\hline \text { Actual units produced } & 19,000 \text { units } \
\hline
\end{array}$$ What is the direct materials efficiency variance?
A) $19,000 U
B) $24,000 F
C) $24,000 U
D) $19,000 F

Quizplus · Accepted Answer

The direct materials efficiency variance is calculated as the difference between the actual quantity of materials used and the standard quantity allowed for the actual output, multiplied by the standard cost per unit of material. The standard quantity allowed for the actual output is 19,000 units * 4 pounds/unit = 76,000 pounds. The actual quantity used is 100,000 pounds. The difference is 100,000 pounds - 76,000 pounds = 24,000 pounds. Since more materials were used than the standard allows, this is unfavorable. The standard cost per unit of material is $1/pound, so the variance is 24,000 pounds * $1/pound = $24,000 U.

Melissa Antiques Company Has Collected the Following Data for One