Galla Corporation makes a product with the following standard costs: The company budgeted for production of 2, 400 units in June, but actual production was 2, 500 units.The company used 19, 850 pounds of direct material and 980 direct labor-hours to produce this output.The company purchased 21, 700 pounds of the direct material at $6.70 per pound.The actual direct labor rate was $19.20 per hour and the actual variable overhead rate was $1.80 per hour. The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased.
The materials quantity variance for June is:

Question

Galla Corporation makes a product with the following standard costs:  The company budgeted for production of 2, 400 units in June, but actual production was 2, 500 units.The company used 19, 850 pounds of direct material and 980 direct labor-hours to produce this output.The company purchased 21, 700 pounds of the direct material at $6.70 per pound.The actual direct labor rate was $19.20 per hour and the actual variable overhead rate was $1.80 per hour. The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased.
The materials quantity variance for June is:

Quizplus · Accepted Answer

SQ = 2, 500 units × 8.2 liters per unit = 20, 500 liters
Materials quantity variance = (AQ - SQ)× SP
= (19, 850 liters - 20, 500 liters)× $7.00 per liter
= (-650 liters)× $7.00 per liter
= $4, 550 F

Galla Corporation Makes a Product with the Following Standard Costs