The Armstrong corporation developed a flexible budget for its production Process

Question

The Armstrong corporation developed a flexible budget for its production Process. Armstrong budgeted to use 14,000 Pounds of direct material with a standard cost of $10 per pound to Produce 10,000 units of finished Product. Armstrong actually Purchased 22,000 pounds and used 16,000 pounds of direct material with a cost of $18 per pound to Produce 10,000 units of finished product. Given these results, What is Armstrong's direct material quantity variance? A. $80,000 unfavorable B. $20,000 unfavorable C. $20,000 favorable D. $80,000 favorable

Explanation / Answer

Direct Material Quantity variance = (Standard Quantity - Actual Quantity) * Standard Price per unit

= (14000 - 16000) * $10

= $20000 (U)

#Actual Quantity = 16000 pounds

#Standard Quantity = 14000 pounds

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