Question

Majer Corporation makes a product with the following standard costs:

	Standard Quantity or Hours			Standard Price or Rate			Standard Cost Per Unit
Direct materials		6.5	ounces	$	2.00	per ounce	$	13.00
Direct labor		0.8	hours	$	18.00	per hour	$	14.40
Variable overhead		0.8	hours	$	2.00	per hour	$	1.60

The company reported the following results concerning this product in February.

Originally budgeted output		4,600	units
Actual output		5,300	units
Raw materials used in production		30,500	ounces
Actual direct labor-hours		1,810	hours
Purchases of raw materials		32,900	ounces
Actual price of raw materials	$	97.10	per ounce
Actual direct labor rate	$	87.60	per hour
Actual variable overhead rate	$	6.10	per hour

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The materials quantity variance for February is:

Answer 1

Material quantity variance = (standard qty-actual qty)Standard price

= (5300*6.5-30500)*2

Material quantity variance = 7900 F