Haden Company has determined that the standard material cost for the silk used in making a dress is $27.00 based on three square feet of silk at a cost of $9.00 per square foot. The production of 1,000 dresses resulted in the use of 3,400 square feet of silk at a cost of $9.20 per square foot. What is the direct material quantity variance?
Business · High School · Thu Feb 04 2021
Answered on
Here's how to do that step by step:
1. Determine the standard quantity of material allowed for the actual production:
Since the standard is 3 square feet of silk per dress, for 1,000 dresses, the company should have used:
3 square feet/dress * 1,000 dresses
= 3,000 square feet of silk
2. Determine the actual quantity of material used: It is given that the company used 3,400 square feet of silk.
3. Calculate the difference in quantity:
Actual quantity used - Standard quantity allowed
= 3,400 square feet - 3,000 square feet
= 400 square feet
4. Calculate the direct material quantity variance:
Difference in quantity * Standard cost per square foot
= 400 square feet * $9.00/square foot
= $3,600.