ostVisited Getting Started Oceanside Marine Company manufactures special metalli

Question

ostVisited Getting Started Oceanside Marine Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Oceanside uses standard costs to prepare its flexible budget. For the first quarter of the year, direct materials and direct labor standards for one of their popular products were as follows: Studert Portal Career Center Direct materials: 2 pound per unit; $12 per pound Direct labor: 2 hours per unit; $18 per hour Oceanside produced 2,000 units during the quarter. At the end of the quarter, an examination of the direct materials records showed that the company used 7,500 pounds of direct materials and actual total materials costs were $98,700. What is the direct materials cost variance? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

Explanation / Answer

Direct material cost variance = (Standard cost-actual cost)

= (2000*2*12-98700)

Direct material cost variance = 50700 Unfavourable

Direct material price variance = (12*7500-98700) = 8700 Unfavourable

Direct material quantity variance = (2000*2-7500)*12 = 42000 Unfavourable

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