Choice "A" is correct. The quantity usage variance applies the standard rate per unit to the difference between actual raw materials used and standard materials allowed to measure the efficient use of product in a manufacturing process. Standard materials allowed is computed by multiplying the actual output times the standard material allowed per unit. The manufacturing company produced 4,500 trivets and allows 2 units of materials per trivet. The standard quantity allowed is 9,000 units (4,500 × 2). Using the tabular format, the quantity usage variance is computed as follows:
Actual quantity used (given) | 9,400 | |
Standard price | × $3 | $ 28,200 |
| | |
Standard quantity allowed (computed above) | 9,000 | |
Standard price | × $3 | $ 27,000 |
Variance | | $ (1,200) |
Because the amount used was greater than the amount allowed, the variance is unfavorable.Choice "b" is incorrect. The quantity usage variance uses standard rather than the actual rates as proposed by this choice.Choice "d" is incorrect. This proposed solution correctly computes the price variance, but not the usage variance. [$33,000 / 10,000 units$3.30 per unit actual price. Standard price per unit$3.00. ($3.30 − $3.00) × 10,000 units purchased$3,000 price variance.]Choice "c" is incorrect. The proposed solution appears to compare units of materials purchased with units required for sales at standard usage at standard rate. [9,400 × $3$28,200. 4,000 × $3 × 2$24,000. $28,200 − $24,000$4,200.] The correct computation of the quantity variance is described above.
