Pleasure Beach, Inc. recently completed 61,000 units of a product that was expected to consume 4 pounds of direct material per finished unit. The standard price of the direct material was $8.50 per pound. If the firm purchased and consumed 252,000 pounds in manufacturing (cost = $2,049,800), the direct-material quantity variance would be figured as:

Material quantity variance $68,000 unfavorable

Explanation:

Material quantity variance occurs when the actual quantity used to achieved a given level of output is more or less than the standard quantity.

It is determined by the difference between the actual and standard quantity of material for the actual level of output multiplied by the the standard price

Pounds

61,000 units should have used (61,000 * 4) 244000

but did used 252,000

8000 unfavorable

Standard price * 8.50

Material quantity variance $68,000 unfavorable

Direct material quantity variance = $68,000 unfavorable

Explanation:

Giving the following information:

Standard cost = $8.5 per pound

Standard quantity = 4 pounds per unit

Units produced = 61,000 units

Actual material = 252,000 pounds.

To calculate the direct material quantity variance, we need to use the following formula:

Direct material quantity variance = (standard quantity - actual quantity) * standard price

Direct material quantity variance = (61,000*4 - 252,000) * 8.5

Direct material quantity variance = (244,000 - 252,000) * 8.5

Direct material quantity variance = $68,000 unfavorable

It is unfavorable because the company used more direct material to produce 61,000 units than estimated.