Dana, Inc. recently completed 56,000 units of a product that was expected to consume four pounds of direct material per finished unit. The standard price of the direct material was $8.50 per pound. If the firm purchased and consumed 228,000 pounds in manufacturing (cost = $1,881,000), the direct-material quantity variance would be figured as:

Question

Quizplus · Accepted Answer

The direct-material quantity variance is calculated as the difference between the actual quantity of direct material used and the standard quantity of direct material that should have been used, multiplied by the standard price of the direct material. In this case, the actual quantity of direct material used was 228,000 pounds, and the standard quantity of direct material that should have been used was 56,000 units * 4 pounds per unit = 224,000 pounds. The difference between the actual and standard quantities is 4,000 pounds. The standard price of the direct material was $8.50 per pound, so the direct-material quantity variance is 4,000 pounds * $8.50 per pound = $34,000 unfavorable.

Dana, Inc Recently Completed 56,000 Units of a Product That Was