The Lucy Corporation purchased and used 129,000 board feet of lumber in production, at a total cost of $1,548,000. Original production had been budgeted for 22,000 units with a standard material quantity of 5.7 board feet per unit and a standard price of $12 per board foot. Actual production was 23,500 units. Compute the material quantity variance.
A) 63,000F
B) 63,000U
C) 59,400F
D) 59,400U

Question

Quizplus · Accepted Answer

We can first calculate the total material cost variance:

Actual Cost - (Standard Price x Actual Quantity) = Material Cost Variance

$1,548,000 - ($12 x 129,000) = $24,000 F

Then, we can use the material cost variance to calculate the material quantity variance:

Material Cost Variance = Material Quantity Variance x Standard Price

$24,000 F = Material Quantity Variance x $12

Material Quantity Variance = $24,000 F / $12 = 2,000 F

Since the actual production was higher than the budgeted production, we know that the actual quantity of lumber used must be higher than the budgeted quantity. Therefore, the material quantity variance must be unfavorable (F), and the answer is C) 59,400F.

The Lucy Corporation Purchased and Used 129,000 Board Feet of Lumber