The standard cost of Product B includes 2 units of direct materials at $4 per un

Question

The standard cost of Product B includes 2 units of direct materials at $4 per unit. During June, 20,900 units of direct materials were purchased and used at a cost of $4.7 per unit to produce 10,500 units of Product B.

Compute the variance requested below and indicate whether the variance is favorable or unfavorable, by indicating U or F. Place the letter by the number, DO NOT add a space. Example, if the variance is 100 unfavorable, enter 100U (DO NOT PUT 100 U)

The Direct Materials spending variance is $_______

Explanation / Answer

The Direct Materials spending variance = Actual Quantity * ( Actual Price - Standard Price)

= 20,900 Units *( $ 4.70 - $ 4)

= $ 14,630 Unfavorable

Since the Actual Cost is more than the Standard Cost, the variance is unfavorable.

Hence the correct answer is 14630U

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