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A Fri v2.cengagenow.com CengageNOWv2 | Online teaching and learning res... Cengage what i Calculator The following data is given for the Stringer Company: Budgeted production Actual production Materials: 26,000 units 27,500 units $6.50 Standard price per ounce Standard ounces per completed unit Actual ounces purchased and used in production Actual price paid for materials 228,000 $1,504,800 Labor $22 per hour 6.6 183,000 $4,020,000 Standard hourly labor rate Standard hours allowed per completed unit Actual labor hours worked Actual total labor costs Overhead: Actual and budgeted fioxed overhead Standard variable overhead rate Actual variable overhead costs $1,029,600 $24.50 per standard labor hour $4,520,00 Overhead is applied on standard labor hours. The direct materials quantity variance is a. 52,000 favorable Ob. 22,800 favorable c. 22,800 unfavorable d. 52,000 unfavorable

Explanation / Answer

Direct material quantity variance = Standard Price x (Standard Quantity – Actual Quantity)

                                                             = $ 6.5 x [(8 x 27,500) – 228,000]

= $ 6.5 x (220,000 – 228,000)

                                                                    = $ 6.5 x (– 8,000) = $ -52,000 U

Hence option “d. 52,500 unfavorable” correct answer.

Direct material quantity variance = Standard Price x (Standard Quantity – Actual Quantity)

                                                             = $ 6.5 x [(8 x 27,500) – 228,000]

= $ 6.5 x (220,000 – 228,000)

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