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  • 1.  Exam 1 Additional Practice Question

    Posted 06-18-2020 11:45 AM
    Hi, I am currently studying to hopefully take Part 1 in September and need a bit of help with the following question, the answer is B but there is no explanation.


    A company's master budget indicated that 50,000 units of finished goods should be produced
    using 25,000 feet of materials at $4 per foot. The company actually produced 48,000 units of
    finished goods, purchased 27,000 feet of materials at $4.25 per foot, and used 25,000 feet of
    materials in production. The direct material efficiency variance is

    a. $0.
    b. $4,000 unfavorable.
    c. $6,000 unfavorable.
    d. $8,000 unfavorable.

    TIA

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    Carla Loera
    Student
    Laredo TX
    United States
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  • 2.  RE: Exam 1 Additional Practice Question

    Posted 06-18-2020 02:38 PM
    Hello Carla,
    Static budget direct materials per unit = 25000 / 50000 = 0.5 ft
    Flexible budget direct material quantity = Actual units  x 0.5 =  48000 x 0.5= 24000 ft
    Actual budget direct material quantity is given 25000 ft
    Direct material quantity (efficiency) variance = SP x (AQ - SQ) = 4 x (25000 - 24000) = 4000 unfavorable because actual DM usage exceeded the budget usage.


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    Adham Mourad
    Accountant
    Doha
    Qatar
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    Original Message


  • 3.  RE: Exam 1 Additional Practice Question

    Posted 06-19-2020 09:56 AM
    thank you so much for your help!

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    Carla Loera
    Student
    Laredo TX
    United States
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    Original Message