Question

Georgia, Inc. has collected the following data on one of its products. The direct materials quantity variance is:

Direct materials standard (2 lbs @ $1/lb)	$2	per finished unit
Total direct materials cost variance—unfavorable	$20,750
Actual direct materials used	72,000	lbs.
Actual finished units produced	24,000	units

Multiple Choice

• $24,000 unfavorable.

• $20,750 unfavorable.

• $3,250 favorable.

• $20,750 favorable.

• $24,000 favorable.

Answer 1

Correct answer------------$24,000 unfavorable

Working

Material Quantity Variance
(	Standard Quantity	-	Actual Quantity	)	x	Standard Rate
(	48000	-	72000	)	x	$              1.00
	-24000
	Variance		$           24,000.00			Unfavourable-U

.

Standard DATA for		24000	Units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct Material	( 2 pounds x 24000 Units)=48000 pounds	$                   1.00	$            48,000.00