Dana Inc recently completed 75000 units of a product that wa

Dana, Inc. recently completed 75,000 units of a product that was expected to consume 3 pounds of direct material per finished unit. The standard price of the direct material was $5.50 per pound. If the firm purchased and consumed 231,000 pounds in manufacturing (cost = $1,204,500), the direct-material quantity variance would be:

$33,000U.

$33,000F.

$66,000U.

$66,000F.

None of these.

Solution

Solution: $33,000 U

working:

Direct material quantity variance = Actual Quantity x Standard Price - Standard Quantity x Standard Price

= 231,000 x $5.50 - 225,000 x $5.50

= $33,000

Since, Actual Quantity is more than Standard Quantity, so it is Unfavourable