Brent received a report from the production and purchasing departments with the following values for August: Actual materials quantity: 6,200 pounds Total actual cost: $9,250 Standard materials quantity: 1.25 pounds/unit Standard price: $1.50/pound Units made: 4,800 Two days later, Brent received a correction from the production department that they found a missing order for 200 units, which means they made 5,000 units in August. How much would Brent's materials quantity variance change for the month of August? A : $75F B : $375F C : $375 U D : $75 U

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Business

Miley Hines

15 December, 16:41

Brent received a report from the production and purchasing departments with the following values for August: Actual materials quantity: 6,200 pounds Total actual cost: $9,250 Standard materials quantity: 1.25 pounds/unit Standard price: $1.50/pound Units made: 4,800 Two days later, Brent received a correction from the production department that they found a missing order for 200 units, which means they made 5,000 units in August. How much would Brent's materials quantity variance change for the month of August? A : $75F B : $375F C : $375 U D : $75 U

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Donaldson · Answer 1

Material quantity variance

= (Standard quantity - Actual quantity) x Standard price

After the adjustment for missing order

Material quantity variance

= (1.25 x 5,000 - 6,200) x $1.50

= $ 75 (F)

The correct answer is A

Explanation:

Material quantity variance is the difference between standard quantity and actual quantity used multiplied by standard price. Standard quantity is standard quantity per unit multiplied by units made. Since the units made are now 5,000 units. Standard quantity will be 1.25 multiplied by 5,000 units.