Cateye Corporation Company budgeted 600 kilograms of direct materials costing $27.00 per kilogram to make 6,000 units of product. The company actually used 585 kilograms of direct materials costing $28.00 per kilogram to make the 6,000 units. What is the direct materials efficiency variance?

Question

Quizplus · Accepted Answer

The direct materials efficiency variance is calculated as (Actual Quantity - Standard Quantity) x Standard Price. Here, it is (585kg - 600kg) x $27/kg = (-15kg) x $27/kg = -$405, which is a $405 favourable variance because less material was used than planned.

Cateye Corporation Company Budgeted 600 Kilograms of Direct Materials Costing