Cultco Company Ltd has set the following direct material standards per unit of product: 2.5 kg @ $3.00 per kg; $7.50 per unit. During April, actual direct material purchased and used amounted to 8000 kg at a cost of $3.10 per kg. Actual production amounted to 3000 units. Determine the total material variance.
A) $2300 (U)
B) $11 500 (U)
C) $800 (U)
D) $750 (U)

Question

Quizplus · Accepted Answer

The total material variance is calculated as: (Actual Quantity x Actual Price) - (Standard Quantity x Standard Price). Here, (8000 kg x $3.10) - (3000 units x 2.5 kg/unit x $3.00) = $24,800 - $22,500 = $2,300 Unfavorable (U).

Cultco Company Ltd Has Set the Following Direct Material Standards