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: 2 pound per unit; $12 per pound Direct labor: 2 hours per unit; $18 per hour Oceanside produced 2,000 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 $98,700. What is the direct materials cost variance?

Question

Business

Jaylon Atkinson

17 October, 19:17

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: 2 pound per unit; $12 per pound Direct labor: 2 hours per unit; $18 per hour Oceanside produced 2,000 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 $98,700. What is the direct materials cost variance?

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Answers (1)

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Josephine Kim · Answer 1

The direct materials cost variance is $8,700 (Unfavorable)

Explanation:

What is the direct materials cost variance?

Actual Standarded Cost

Given 7.500*12

98700 90.000

Direct material cost variance = 98.700 - 9.000 = $8,700 Unfavorable