During March, 80,000 units of a standard product were produced. The standard quantity of direct material allowed for one unit was two pounds at a standard price of $5 per pound. If there was a favorable direct material quantity variance of $40,000 for March, the actual quantity of direct material used must have been Multiple Choice 168,000 pounds 152,000 pounds 84,000 pounds 76,000 pounds

Answer: 152,000 pounds

Explanation:

Right. Variance is refered to as the difference between the Actual units it took to produce and the budgeted / standard unit it took

When the Actual units are less than the standard units, the Variance is said to be Favourable. The reverse is true.

So first we will calculate the standard quantity of direct material.

The standard quantity of direct material allowed for one unit was two pounds at a standard price of $5 per pound with 80,000 units produced,

Calculating therefore would give us,

= 80,000 * 5 * 2

= $800,000

$800,000 was the standard variance.

It was said that the variance is favourable meaning that the Standard Variance is more than the actual.

So subtracting the variance we have,

= 800,000 - 40,000

= $760,000

$760,000 is the actual quantity amount so we have to convert to pounds,

= 760,000 / $5 per pound

= 152,000 pounds

The actual quantity of direct material used for March must have been $152,000 pounds.