Managerial Accounting Quiz: Direct Materials Variances
20 questions · exam conditions
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Direct Materials VariancesQuestion 1 of 20

For the month of May, a company's flexible budget for direct materials was $80,000 based on actual production. The actual cost of direct materials used was $84,000. The company purchased and used the same amount of material during the month. An investigation revealed that the purchasing department paid the standard price for all materials.

What is the direct materials quantity variance?

$0
$4,000 Favorable
$4,000 Unfavorable
Cannot be determined from the information.
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Managerial Accounting Quiz

Managerial Accounting Quiz: Direct Materials Variances

Practice Direct Materials Variances in Managerial Accounting with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

What this quiz covers

This quiz focuses on Direct Materials Variances, giving you a quick way to practice the rules, question types, and explanations that matter most for Managerial Accounting.

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

All questions

Question 1

For the month of May, a company's flexible budget for direct materials was $80,000 based on actual production. The actual cost of direct materials used was $84,000. The company purchased and used the same amount of material during the month. An investigation revealed that the purchasing department paid the standard price for all materials.

What is the direct materials quantity variance?

  1. $0
  2. $4,000 Favorable
  3. $4,000 Unfavorable (correct answer)
  4. Cannot be determined from the information.
Explanation: 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.

Question 2

A company, which uses a standard costing system, produced 8,000 units of its product. It used 41,500 pounds of material, which had been purchased at the standard price of $15.00 per pound. The resulting materials quantity variance was $7,500 unfavorable.

What is the standard quantity of material allowed per finished unit of product?

  1. 5.000 pounds
  2. 5.250 pounds
  3. 5.188 pounds
  4. 5.125 pounds (correct answer)
Explanation: 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.

Question 3

A company's total direct materials variance was $2,000 favorable. The company purchased and used 10,000 liters of material. The standard price is $8.00 per liter, and the standard quantity allowed for actual production was 9,500 liters.

What was the direct materials price variance?

  1. $2,000 Unfavorable
  2. $6,000 Unfavorable
  3. $2,000 Favorable
  4. $6,000 Favorable (correct answer)
Explanation: 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.

Question 4

A company's standard for a product is 4 feet of material at $5.00 per foot. The company produced 1,000 units. The materials price variance, based on materials used, was $3,500 unfavorable, and the materials quantity variance was $2,500 favorable.

What was the total actual cost of direct materials used?

  1. $19,000
  2. $20,000
  3. $21,000 (correct answer)
  4. $26,000
Explanation: 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.

Question 5

A company purchased 15,000 liters of a chemical solvent. The standard cost for this quantity was $90,000. The actual total cost of the purchase was $85,500. The company later used 14,000 liters in production, for which the standard quantity allowed was 13,800 liters.

What is the company's direct materials price variance?

  1. $4,500 Unfavorable
  2. $1,200 Unfavorable
  3. $4,500 Favorable (correct answer)
  4. $4,200 Favorable
Explanation: 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.

Question 6

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?

  1. $319,000
  2. $301,000 (correct answer)
  3. $310,000
  4. $299,000
Explanation: 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.

Question 7

A company isolates its direct materials price variance at the time of purchase. Last month, it purchased 12,000 pounds of material at an actual price of $8.20 per pound. The total actual cost of the purchase was $98,400. This purchase generated a favorable price variance of $3,600.

What is the standard price per pound of material?

  1. $7.90
  2. $8.50 (correct answer)
  3. $8.20
  4. $0.30
Explanation: 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.

Question 8

A company produces industrial widgets. The standard for one widget requires 3 pounds of direct material at a standard price of $4.00 per pound. In the most recent period, the company produced 5,000 widgets. It purchased 16,000 pounds of material for a total cost of $68,000, and used 15,200 pounds in production.

What is the direct materials quantity variance?

  1. $800 Unfavorable (correct answer)
  2. $850 Unfavorable
  3. $4,000 Unfavorable
  4. $800 Favorable
Explanation: 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) \times \4.00 = 200 \times $4.00 = $800$. Since the actual quantity used exceeded the standard quantity allowed, the variance is unfavorable.

Question 9

A company reported a direct materials price variance of $5,400 unfavorable. The company had purchased 36,000 units of the material, and the standard price is $6.00 per unit. What was the actual price paid per unit of material?

  1. $6.15 (correct answer)
  2. $5.85
  3. $6.00
  4. $0.15
Explanation: The materials price variance formula is MPV = Actual Quantity Purchased × (Actual Price - Standard Price). We have $5,400 = 36,000 \times (AP - $6.00). Dividing the variance by the quantity gives the per-unit price difference: $5,400 / 36,000 = $0.15. Since the variance is unfavorable, the actual price was higher than the standard price. Therefore, AP = $6.00 + $0.15 = $6.15.

Question 10

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?

  1. 17,500 feet (correct answer)
  2. 18,500 feet
  3. 500 feet
  4. 17,000 feet
Explanation: 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.

Question 11

A company's policy is to compute the materials price variance at the time materials are used in production. Data for the period includes: materials purchased, 20,000 kg at $5.50/kg; materials used in production, 18,000 kg; standard price, $5.25/kg; standard quantity allowed for actual output, 17,500 kg.

What is the company's direct materials price variance for the period?

  1. $4,500 Unfavorable (correct answer)
  2. $5,000 Unfavorable
  3. $2,625 Unfavorable
  4. $4,500 Favorable
Explanation: The problem states the price variance is computed based on the quantity of materials used. The formula is MPV = Actual Quantity Used × (Actual Price - Standard Price). The variance is (18,000) kg ×\times ($5.50 - $5.25) = (18,000) kg ×\times $0.25 = $4,500. Since the actual price was higher than the standard price, the variance is unfavorable.

Question 12

A product's standard cost includes 2.5 meters of fabric per unit at a standard price of $15.00 per meter. During the last quarter, the company budgeted to produce 10,000 units but actually produced 11,000 units. The company used 28,000 meters of fabric for this production.

What is the direct materials quantity variance?

  1. $7,500 Unfavorable (correct answer)
  2. $45,000 Unfavorable
  3. $7,500 Favorable
  4. $45,000 Favorable
Explanation: 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.

Question 13

A company's standard price for its primary raw material is $10.00 per unit. During June, the company made two purchases: on June 5, it bought 1,000 units at $9.80 per unit, and on June 21, it bought 3,000 units at $10.30 per unit. The company computes its materials price variance at the time of purchase.

What is the total materials price variance for June?

  1. $613 Unfavorable
  2. $1,100 Unfavorable
  3. $700 Favorable
  4. $700 Unfavorable (correct answer)
Explanation: 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.

Question 14

For the month of June, a company's total actual cost for direct materials used was $150,000. The standard cost of direct materials allowed for the units produced was $140,000. The company computes price variances at the time of usage. An analysis of the variances revealed a direct materials quantity variance of $4,000 favorable.

What was the direct materials price variance for June?

  1. $14,000 Unfavorable (correct answer)
  2. $6,000 Unfavorable
  3. $10,000 Unfavorable
  4. $14,000 Favorable
Explanation: 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.

Question 15

A manufacturing firm's standard cost card for its product specifies 5 kg of a certain material per unit. Last month, the firm produced 1,000 units. It used 5,100 kg of the material, resulting in a direct materials quantity variance of $1,000 unfavorable.

What was the standard price per kg for the material?

  1. $0.20
  2. $10.00 (correct answer)
  3. $9.80
  4. $0.196
Explanation: 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.

Question 16

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?

  1. $5.25
  2. $5.00 (correct answer)
  3. $5.50
  4. $0.25
Explanation: 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.

Question 17

A company uses a standard costing system and records the materials price variance at the time of purchase. The general ledger journal entry to record the purchase of its only direct material included a debit to Raw Materials Inventory for $250,000 and a credit to Accounts Payable for $265,000.

Based on this entry, what was the direct materials price variance?

  1. Cannot be determined from the entry.
  2. $15,000 Favorable
  3. $15,000 Unfavorable (correct answer)
  4. $515,000 Unfavorable
Explanation: 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.

Question 18

A company uses a standard costing system and calculates the materials price variance at the time of purchase. The company began the month with no materials inventory. During the month, it purchased 50,000 pounds of material and used 44,000 pounds. The materials price variance was $10,000 unfavorable, and the materials quantity variance was $12,000 favorable. The standard price is $6.00 per pound.

What was the total actual cost of materials purchased?

  1. $300,000
  2. $290,000
  3. $272,800
  4. $310,000 (correct answer)
Explanation: 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.

Question 19

A company produces industrial widgets. The standard for one widget requires 3 pounds of direct material at a standard price of $4.00 per pound. In the most recent period, the company produced 5,000 widgets. It purchased 16,000 pounds of material for a total cost of $68,000, and used 15,200 pounds in production.

Assuming the company calculates the materials price variance at the time of purchase, what is the direct materials price variance?

  1. $4,000 Unfavorable (correct answer)
  2. $3,800 Unfavorable
  3. $800 Unfavorable
  4. $4,000 Favorable
Explanation: The direct materials price variance is calculated as (Actual Quantity Purchased × Actual Price) - (Actual Quantity Purchased × Standard Price). The actual price is (68,000 / 16,000\) pounds = \4.25 per pound. The variance is 16,000 \times (\4.25 - $4.00) = 16,000 \times $0.25 = $4,000$. Since the actual price exceeded the standard price, the variance is unfavorable.

Question 20

Epsilon Manufacturing produces a single product with the following standard costs per unit: Direct materials: 3 pounds at $4.00 per pound = $12.00

During November, the company reported:

  • Purchased 18,000 pounds of materials for $74,700
  • Produced 5,800 units
  • Materials quantity variance: $800 unfavorable

Based on the information provided above, how many pounds of materials were actually used in production during November?

  1. 17,600 pounds of materials were actually used in production (correct answer)
  2. 17,200 pounds of materials were actually used in production
  3. 17,400 pounds of materials were actually used in production
  4. 18,200 pounds of materials were actually used in production
Explanation: 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.