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 $ 11 December Data     Number of Sails Produced 28,566     Cloth (Direct Materials)         Actual Price $ 4         Actual Usage 105,072 square yards         Standard Quantity Allowed (given production) 112,464 square yards     Direct Labor         Actual Rate $ 13         Actual Usage 21,851 hours         Standard Quantity Allowed (given production) 23,007 hours

Explanation / Answer

Direct material usage variance:

= (Actual Quantity - Standard Quantity allowed) x Standard Price

=(105,072-112,464)×$4

=$29,568 F

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