A company uses the following standard costs to produce a single unit of output. During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the direct materials quantity variance for the month was:
A) $1,800 favorable
B) $5,800 unfavorable
C) $5,800 favorable
D) $1,800 unfavorable
E) $1,000 favorable

Question

A company uses the following standard costs to produce a single unit of output.  During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the direct materials quantity variance for the month was:
A) $1,800 favorable 
B) $5,800 unfavorable 
C) $5,800 favorable 
D) $1,800 unfavorable 
E) $1,000 favorable

Quizplus · Accepted Answer

DM Quantity Variance = (Actual Quantity - Standard Quantity) × Standard Price
= [58,000 − (10,000 units × 6 pounds per unit)] × $0.90; [58,000 − 60,000] × $0.90
= 2,000 × $.90; $1,800 favorable

A Company Uses the Following Standard Costs to Produce a Single