Degregorio Corporation makes a product that uses a material with the following direct material standards: The company produced 5,600 units in November using 21,750 kilos of the material. During the month, the company purchased 24,800 kilos of the direct material at a total cost of $168,640. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for November is:
A)$3,290 F
B)$3,196 F
C)$3,290 U
D)$3,196 U

Question

Degregorio Corporation makes a product that uses a material with the following direct material standards:  The company produced 5,600 units in November using 21,750 kilos of the material. During the month, the company purchased 24,800 kilos of the direct material at a total cost of $168,640. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for November is:
A)$3,290 F 
B)$3,196 F 
C)$3,290 U 
D)$3,196 U

Quizplus · Accepted Answer

Materials quantity variance = (Standard quantity allowed for actual output - Actual quantity used) x Standard price

Standard quantity allowed = standard quantity per unit x actual output = 3.9 kilos x 5,600 units = 21,840 kilos

Actual quantity used = 21,750 kilos

Standard price = $7.70 per kilo

Materials quantity variance = (21,840 - 21,750) x $7.70 = $697 U

Therefore, the materials quantity variance for November is $697 unfavorable, which means the actual quantity used was more than the standard quantity allowed for the actual output. Option C is the correct answer as it shows materials quantity variance of $3,290 U (unfavorable).

Degregorio Corporation Makes a Product That Uses a Material with the Following