Electric Zero produces relay units for generators. Each relay has a standard mat

Question

Electric Zero produces relay units for generators. Each relay has a standard material cost of $67. Standards call for two relays per generator. In July, the company purchased 120 relays for $7,560. The company used 104 relays in the production of 50 generators, with 4 relays damaged in the installation process. The standard quantity of labor is 20 hours per generator, with a standard wage rate of $23. The company incurred 1,020 labor hours at a cost of $22,950. How much is the material quantity variance?

A) $480 favorable

B) $268 unfavorable

C) $1,340 unfavorable

D) $592 unfavorable

Explanation / Answer

Material Quantity Variance = Standard Price * ( Standard Quantity - Actual Quantity)

Standard Quantity of relays for 50 generators = 50 * 2 =100

Actual Quantity used for 50 generator = 104

Material Quantity variance = 67 * ( 100 - 104 + = $ 268 Unfavourable

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