Question 17 (5 points) Magno Cereal Corporation uses a standard cost system to c

Question

Question 17 (5 points)

Magno Cereal Corporation uses a standard cost system to collect costs related to the production of its "crunchy pickle" cereal. The pickle (materials) standards for each batch of cereal produced are 1.4 pounds of pickles at a standard cost of $3.00 per pound. During the month of August, Magno purchased 78,000 pounds of pounds at a total cost of $253,500. Magno used all of these pickles to produce 60,000 batches of cereal. What is Magno's materials quantity variance for the month of August?
$1,500 unfavorable
$18,000 favorable
$19,500 unfavorable
$54,000 unfavorable

show work please

Explanation / Answer

$253,500/78,000 = 3.25 which means that they are paying $3.25 per pound for pickles. However, the standard is $3.00 per pound. Therefore, they are paying $.25 extra. Take that price variance and multiply it by the actual pounds purchased to get your answer: 0.25 x 78,000 = $19,500 This variance is unfavorable because they paid 25 cents too much for the materials.

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