Andean Company has the following information available: Budgeted cost of direct
ID: 2416652 • Letter: A
Question
Andean Company has the following information available:
Budgeted cost of direct materials at 300,000 units
$ 720,000
Budgeted cost of direct materials at 275,000 units
$ 660,000
Actual cost of direct materials at 300,000 units
$ 750,000
Actual level of output (units)
300,000
Planned level of output (units)
275,000
What is the direct material quantity variance? You must include your calculations.
YOU MUST SHOW YOUR CALCULATIONS/WORK OR I WILL THUMB DOWN :( You can be brief!!!
Budgeted cost of direct materials at 300,000 units
$ 720,000
Budgeted cost of direct materials at 275,000 units
$ 660,000
Actual cost of direct materials at 300,000 units
$ 750,000
Actual level of output (units)
300,000
Planned level of output (units)
275,000
Explanation / Answer
Standard cost per unit=$720,000/300,000=$2.4
Direct material quantity variance formula=
(Standard usage in units- Actual usage in units -) x Standard cost per unit
(Std direct materials Quantity - Actual direct materials Quantity) x 2.4
=(300,000-300,000) x 2.4=Nil
Additional Information:There is only price variance