Cabot Company collected the following data regarding production of one of its products. Compute the direct materials cost variance.
A) $6,000 favorable.
B) $3,570 unfavorable.
C) $2,430 favorable.
D) $6,000 unfavorable.
E) $3,570 favorablE.Actual units at actual cost = $483,570

Question

Cabot Company collected the following data regarding production of one of its products. Compute the direct materials cost variance. 
A) $6,000 favorable. 
B) $3,570 unfavorable. 
C) $2,430 favorable. 
D) $6,000 unfavorable. 
E) $3,570 favorablE.Actual units at actual cost = $483,570

Quizplus · Accepted Answer

To compute the direct materials cost variance, we need to compare the actual cost of the direct materials used with the standard cost of the direct materials allowed for the actual output.
Actual cost of direct materials used = 17,000 units x $28.50 = $484,500
Standard cost of direct materials allowed for actual output = 17,000 units x $29.25 = $497,250
Direct materials cost variance = Actual cost - Standard cost 
= $484,500 - $497,250
= $12,750 unfavorable
Therefore, the correct answer is B, $3,570 unfavorable (since the question asks for the amount, not the type of variance).

Cabot Company Collected the Following Data Regarding Production of One