Perez, Inc. recently completed 40,000 units of a product that was expected to consume six pounds of direct material per finished unit. The standard price of the direct material was $7.50 per pound. If the firm purchased and consumed 246,000 pounds in manufacturing (cost = $1,881,000), the direct-material quantity variance would be (with steps)

$45,000 Unfavorable

Explanation:

The computation of direct-material quantity variance is shown below:-

Direct Material Quantity Variance = Standard Rate × (Actual Quantity - Standard Quantity Used for Actual Production)

= $7.50 × (246,000 - 40,000 × 6)

= $7.50 × (246,000 - 240,000)

= $7.50 × 6,000

= $45,000 Unfavorable

Therefore for computing the direct-material quantity variance we simply applied the above formula.

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