Answered Essay: Majer Corporation makes a product with the following standard costs:

Majer Corporation makes a product with the following standard costs:

Standard Quantity
or Hours
Standard Price or
Standard Cost Per Unit
Direct materials 6.1 ounces $ 2.00 per ounce $ 12.20
Direct labor 0.2 hours $ 12.00 per hour $ 2.40
Variable overhead 0.2 hours $ 2.00 per hour $ 0.40

The company reported the following results concerning this product in February.

Originally budgeted output 5,400 units
Actual output 5,700 units
Raw materials used in production 33,100 ounces
Actual direct labor-hours 1,890 hours
Purchases of raw materials 28,300 ounces
Actual price of raw materials $ 17.10 per ounce
Actual direct labor rate $ 7.60 per hour
Actual variable overhead rate $ 5.30 per hour

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The materials quantity variance for February is:

Multiple Choice

$3,340 F

$3,277 F

$3,340 U

$3,277 F

Expert Answer


Material quantity variance:

= Standard quantity×Standard cost per unit- Actual quantity×Standard cost per unit

= 5,700×6.10×$2-33,100×$2

= $69,540-$66,200

= $3,340 F

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