Abba Company produces sails for boats. The Houston plant uses a standard costing

Question

Abba Company produces sails for boats. The Houston plant uses a standard costing system with the following standards for materials (cloth) and direct labor.

There are no beginning or ending inventories for direct materials.

For direct materials, what is the usage variance?

Standards     Cloth (Direct Materials)         Standard Price $ 4     Direct Labor         Standard Rate $ 10 December Data     Number of Sails Produced 30,699     Cloth (Direct Materials)         Actual Price $ 5         Actual Usage 104,480 square yards         Standard Quantity Allowed (given production) 115,847 square yards     Direct Labor         Actual Rate $ 11         Actual Usage 23,130 hours         Standard Quantity Allowed (given production) 19,195 hours

Explanation / Answer

Direct Material Quantity Variance = (Standard Quantity - Actual Quantity) x Standard Rate                                                              = ( 115847 - 104480) x 4                                                              = 45468 Fav

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