The Armstrong Corporation developed a flexible budget for its production process. Armstrong budgeted to use 12,000 pounds of direct material with a standard cost of $14 per pound to produce 14,000 units of finished product. Armstrong actually purchased 24,000 pounds and used 15,000 pounds of direct material with a cost of $30 per pound to produce 14,000 units of finished product. Given these results, what is Armstrong's direct material quantity variance?

Question

Business

Cael Mcintosh

31 March, 17:53

The Armstrong Corporation developed a flexible budget for its production process. Armstrong budgeted to use 12,000 pounds of direct material with a standard cost of $14 per pound to produce 14,000 units of finished product. Armstrong actually purchased 24,000 pounds and used 15,000 pounds of direct material with a cost of $30 per pound to produce 14,000 units of finished product. Given these results, what is Armstrong's direct material quantity variance?

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Andreas Turner · Answer 1

Direct material quantity variance = $41,440 unfavorable

Explanation:

Giving the following information:

Standard quantity per unit = 12,000/14,000 = 0.86 pounds per unit

Standard cost of $14 per pound.

Used 15,000 pounds of direct material with a cost of $30 per pound to produce 14,000 units of finished product.

To calculate the direct material quantity variance, we need to use the following formula:

Direct material quantity variance = (standard quantity - actual quantity) * standard price

Direct material quantity variance = (0.86*14,000 - 15,000) * 14

Direct material quantity variance = $41,440 unfavorable