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Given the following information, calculate the direct material efficiency variance.  Actual production in units17,000Standard cost for materials per unit$0.75 per pound × 3 poundsActual cost for materials$36,750 for 52,500 pounds Multiple choice question.$1,050 favorable$1,125 unfavorable$1,125 favorable$1,050 unfavorable

Question

Given the following information, calculate the direct material efficiency variance.  Actual production in units17,000Standard cost for materials per unit0.75perpound×3poundsActualcostformaterials0.75 per pound × 3 poundsActual cost for materials36,750 for 52,500 pounds Multiple choice question.1,050favorable1,050 favorable1,125 unfavorable1,125favorable1,125 favorable1,050 unfavorable

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Solution

To calculate the direct material efficiency variance, we need to follow these steps:

  1. Calculate the standard quantity of material for actual production: This is done by multiplying the actual production units by the standard quantity of material per unit. In this case, it would be 17,000 units * 3 pounds/unit = 51,000 pounds.

  2. Calculate the actual quantity of material used: From the problem, we know this is 52,500 pounds.

  3. Calculate the difference between the standard quantity and the actual quantity: This is done by subtracting the standard quantity from the actual quantity. In this case, it would be 52,500 pounds - 51,000 pounds = 1,500 pounds.

  4. Multiply this difference by the standard cost per unit of material to get the direct material efficiency variance: In this case, it would be 1,500 pounds * 0.75/pound=0.75/pound = 1,125.

Since the actual quantity of material used is more than the standard quantity, this is unfavorable. So, the direct material efficiency variance is $1,125 unfavorable.

This problem has been solved

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