Skip to main content
Sign in Create a free account
Varsity Tutors
Sign in

Direct Materials Variances - Managerial Accounting

  1. What was the direct materials price variance?
    Answer: $6,000 Favorable First, calculate the materials quantity variance (MQV). MQV = (Actual Quantity Used - Standard Quantity Allowed) × Standard Price = (10,000 - 9,500) × $8.00 = 500 × $8.00 = $4,000 Unfavorable. The total variance is the sum of the price and quantity variances. Total Variance = MPV + MQV. We have -$2,000 = MPV + $4,000. Solving for MPV, we get MPV = -$6,000, which is a $6,000 Favorable variance.
  2. Based on the information provided above, how many pounds of materials were actually used in production during November?
    Answer: 17,600 pounds of materials were actually used in production Standard quantity allowed = 5,800 units × 3 pounds per unit = 17,400 pounds. Materials quantity variance = (Actual Quantity Used - Standard Quantity Allowed) × Standard Price. $800 U = (Actual Qty Used - 17,400) × $4.00. Solving: $800 ÷ $4.00 = 200 pounds excess usage. Therefore: Actual Qty Used = 17,400 + 200 = 17,600 pounds. Choice B (17,200) would result in a favorable variance. Choice C (17,400) would result in zero variance. Choice D (18,200) would result in a much larger unfavorable variance of $3,200.
  3. What was the direct materials price variance for June?
    Answer: $14,000 Unfavorable The total direct materials variance is the difference between actual cost and standard cost: $150,000 - $140,000 = $10,000 Unfavorable. The total variance is the sum of the price and quantity variances. So, Total Variance = MPV + MQV. We have $10,000 U = MPV + $4,000 F. Let U be positive and F be negative: $10,000 = MPV - $4,000. Solving for MPV gives $14,000, which is positive and therefore unfavorable.
  4. What is the total materials price variance for June?
    Answer: $700 Unfavorable The total price variance is the sum of the variances for each individual purchase. - Variance for June 5 purchase: 1,000 units × ($9.80 - $10.00) = -$200, or $200 Favorable. - Variance for June 21 purchase: 3,000 units × ($10.30 - $10.00) = +$900, or $900 Unfavorable. - Total variance = $900 U + $200 F = $700 Unfavorable.
  5. Gamma Corp's purchasing department negotiated a special bulk discount, resulting in a materials price variance of $3,200 favorable. However, the materials purchased under this special arrangement had slightly different specifications, leading to higher waste during production and a materials quantity variance of $2,400 unfavorable. If the standard materials cost per unit is $15.00 and 2,000 units were produced, what was the net materials variance as a percentage of standard materials cost for the period?
    Answer: 2.67% favorable net materials variance as percentage of standard cost Net materials variance = $3,200 F - $2,400 U = $800 F. Total standard materials cost = 2,000 units × $15.00 per unit = $30,000. Net variance as percentage = ($800 ÷ $30,000) × 100% = 2.67% favorable. Choice B incorrectly calculates using only half the variance amount. Choice C has the correct percentage but wrong direction (unfavorable instead of favorable). Choice D incorrectly uses the gross favorable variance ($3,200) instead of the net variance.
  6. What is the direct materials quantity variance?
    Answer: $800 Unfavorable The direct materials quantity variance is calculated as (Actual Quantity Used - Standard Quantity Allowed) × Standard Price. The Standard Quantity Allowed for actual production is (5,000) widgets ×\times 3 pounds/widget = (15,000) pounds. The variance is (15,200−15,000)×$4.00=200×$4.00=$800(15,200 - 15,000) \times \$4.00 = 200 \times \$4.00 = \$800. Since the actual quantity used exceeded the standard quantity allowed, the variance is unfavorable.
  7. What was the total actual cost of direct materials used?
    Answer: $21,000 A quick way to solve this is to reconcile from the total standard cost. First, find the standard cost allowed for production: 1,000 units × 4 feet/unit × $5.00/foot = $20,000. Next, find the net variance: $3,500 Unfavorable + $2,500 Favorable = $1,000 Unfavorable. Since the net variance is unfavorable, the actual cost is higher than the standard cost. Actual Cost = Standard Cost + Net Unfavorable Variance = $20,000 + $1,000 = $21,000.
  8. Lambda Industries tracks materials variances separately for each production line. Line A had a materials price variance of $800 favorable and quantity variance of $1,200 unfavorable. Line B had a materials price variance of $600 unfavorable and quantity variance of $900 favorable. If Line A used materials with a standard cost of $12,000 and Line B used materials with a standard cost of $8,000, which line had better overall materials cost performance?
    Answer: Line B performed better with a net variance of 3.75% favorable versus Line A's 3.33% unfavorable Line A: Net variance = $800 F - $1,200 U = $400 U. Percentage = ($400 ÷ $12,000) × 100% = 3.33% unfavorable. Line B: Net variance = $600 U - $900 F = $300 F. Percentage = ($300 ÷ $8,000) × 100% = 3.75% favorable. Line B performed better because it achieved a favorable net variance while Line A had an unfavorable net variance. Choice A reverses the favorable/unfavorable designations. Choice C incorrectly shows Line A as favorable. Choice D incorrectly states both lines had unfavorable results and identical percentages.
  9. What is the company's direct materials price variance?
    Answer: $4,500 Favorable The direct materials price variance is the difference between the actual cost of materials purchased and the standard cost of those same materials. The variance is $85,500 (Actual Cost) - $90,000 (Standard Cost) = -$4,500. A negative result indicates a favorable variance. The information regarding materials used and the standard quantity allowed is relevant for the quantity variance, not the price variance.
  10. What is the direct materials quantity variance?
    Answer: $7,500 Unfavorable The materials quantity variance is based on actual production, not budgeted production. First, calculate the standard quantity (SQ) allowed for actual output: SQ = 11,000 units × 2.5 meters/unit = 27,500 meters. The quantity variance is MQV = (Actual Quantity Used - SQ) × Standard Price = (28,000 - 27,500) × $15.00 = 500 × $15.00 = $7,500. It is unfavorable because more material was used than the standard allowed.
  11. What was the total actual cost of materials purchased?
    Answer: $310,000 The actual cost of materials purchased can be found by adjusting the standard cost of those materials for the price variance. First, calculate the standard cost of the materials purchased: 50,000 pounds × $6.00/pound = $300,000. An unfavorable price variance means the actual cost was higher than the standard cost. Therefore, Actual Cost = Standard Cost + Unfavorable Variance = $300,000 + $10,000 = $310,000. The information about materials used and the quantity variance is not needed to answer this question.
  12. A company reported a favorable direct materials quantity variance of $6,000. The standard price is $12.00 per foot. The standard quantity of material allowed for the units produced was 18,000 feet. What was the actual quantity of materials used?
    Answer: 17,500 feet The materials quantity variance formula is MQV = (Actual Quantity Used - Standard Quantity Allowed) × Standard Price. A favorable variance is negative. We have -$6,000 = (AQ_u - 18,000) × $12.00. First, find the variance in feet: -$6,000 / $12.00 = -500 feet. Then, solve for AQ_u: -500 = AQ_u - 18,000. Therefore, AQ_u = 18,000 - 500 = 17,500 feet.
  13. A company purchased 8,000 units of raw material for a total of $42,000. This purchase resulted in an unfavorable materials price variance of $2,000. What is the standard price per unit of raw material?
    Answer: $5.00 The actual cost ($42,000) equals the standard cost plus the unfavorable variance ($2,000). Therefore, the standard cost of the purchase was $42,000 - $2,000 = $40,000. To find the standard price per unit, divide the total standard cost by the number of units purchased: $40,000 / 8,000 units = $5.00 per unit.
  14. What is the direct materials quantity variance?
    Answer: $4,000 Unfavorable The total flexible budget variance for materials is the difference between actual cost ($84,000) and the flexible budget amount ($80,000), which is $4,000 Unfavorable. The total variance is composed of the price variance and the quantity variance. The problem states that the actual price paid was equal to the standard price (AP = SP), which means the materials price variance is zero. Therefore, the entire total variance must be the materials quantity variance, which is $4,000 Unfavorable.
  15. What is the standard quantity of material allowed per finished unit of product?
    Answer: 5.125 pounds First, use the quantity variance formula to find the total standard quantity (SQ) allowed. MQV = (AQ_u - SQ) × SP. $7,500 = (41,500 - SQ) × $15.00. Divide the variance by the price: $7,500 / $15.00 = 500 pounds. This is the excess quantity used. So, 500 = 41,500 - SQ, which means SQ = 41,000 pounds. To find the standard per unit, divide the total SQ by the number of units produced: 41,000 pounds / 8,000 units = 5.125 pounds per unit.
  16. What is the standard price per pound of material?
    Answer: $8.50 A favorable price variance means the actual price was lower than the standard price. The variance formula is MPV = AQ_p × (AP - SP). A favorable variance is negative: -$3,600 = 12,000 × ($8.20 - SP). First, find the per-unit variance: -$3,600 / 12,000 = -$0.30. So, -$0.30 = $8.20 - SP. Solving for SP gives SP = $8.20 - (-$0.30) = $8.20 + $0.30 = $8.50.
  17. What was the standard price per kg for the material?
    Answer: $10.00 First, determine the standard quantity (SQ) allowed for actual production: 1,000 units × 5 kg/unit = 5,000 kg. Next, determine the variance in quantity: Actual Quantity Used - SQ = 5,100 kg - 5,000 kg = 100 kg excess usage. The quantity variance formula is MQV = (Quantity Difference) × Standard Price. We have $1,000 = 100 kg × SP. Solving for the standard price, SP = $1,000 / 100 kg = $10.00 per kg.
  18. Based on this entry, what was the direct materials price variance?
    Answer: $15,000 Unfavorable The journal entry to record a materials purchase under a standard cost system is: Debit Raw Materials Inventory (Actual Quantity × Standard Price), Credit Accounts Payable (Actual Quantity × Actual Price), and Debit/Credit the Materials Price Variance for the difference. Here, the actual cost ($265,000) is greater than the standard cost ($250,000). To balance the entry, a debit of $15,000 is required for the variance. A debit balance in a variance account represents an unfavorable variance.
  19. Zeta Manufacturing's materials quantity variance for March was exactly zero, but the materials price variance was $1,440 unfavorable. If 9,600 pounds of materials were purchased and used in production at an actual cost of $4.15 per pound, and the company produced 1,600 units, what is the standard quantity of materials allowed per unit?
    Answer: 6.0 pounds per unit is the standard quantity allowed Since quantity variance is zero: Actual Quantity Used = Standard Quantity Allowed = 9,600 pounds. Standard quantity per unit = 9,600 pounds ÷ 1,600 units = 6.0 pounds per unit. We can verify this is consistent with the price variance: Price variance = ($4.15 - Standard Price) × 9,600 pounds = $1,440 U. This gives us Standard Price = $4.15 - ($1,440 ÷ 9,600) = $4.15 - $0.15 = $4.00 per pound, which is reasonable. The other choices would imply different production quantities that don't match the given data of 9,600 pounds used with zero quantity variance.
  20. A company's Raw Materials Inventory account is carried at standard cost. At the beginning of the period, the balance was $50,000. During the period, purchases of raw materials totaled $300,000 at standard cost. The period-end balance was $40,000. If the company incurred an unfavorable materials quantity variance of $9,000, what was the standard cost of materials allowed for production?
    Answer: $301,000 First, calculate the standard cost of materials used (issued to production). This is Beg. Inv. + Purchases - End. Inv. = $50,000 + $300,000 - $40,000 = $310,000. This amount represents (Actual Quantity Used × Standard Price). The quantity variance formula is MQV = (AQ × SP) - (SQ × SP). We have $9,000 = $310,000 - (SQ × SP). The term (SQ × SP) is the standard cost of materials allowed. Solving for this gives $310,000 - $9,000 = $301,000.

Start this quiz