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What is the direct materials cost variance

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Q1. Aquatic Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Aquatic uses standard costs to prepare its flexible budget. For the first quarter of the year, direct materials and direct labor standards for one of their popular products were as follows:

Direct materials: 3 pounds per unit; $4 per pound

Direct labor: 4 hours per unit; $16 per hour

During the first quarter, Aquatic produced 4,000 units of this product. Actual direct materials and direct labor costs were $67,000 and $327,000, respectively.

For the purpose of preparing the flexible budget, calculate the total standard direct materials cost at a production volume of 4,000 units.

A. $67,000

B. $12,000

C. $48,000

D. $16,000

Q2. Oceanside Marine Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Oceanside uses standard costs to prepare its flexible budget. For the first quarter of the year, direct materials and direct labor standards for one of their popular products were as follows:

Direct materials: 1 pound per unit; $11 per pound

Direct labor: 2 hours per unit; $18 per hour

Oceanside produced 4,000 units during the quarter. At the end of the quarter, an examination of the direct materials records showed that the company used 7,500 pounds of direct materials and actual total materials costs were $99,300.

What is the direct materials cost variance? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

A. $16,800 Favorable

B. $16,800 Unfavorable

C. $8,960 Unfavorable

D. $8,960 Favorable

Reference no: EM132784794

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