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Accounting SmartBook Practice Test

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XYZ Company presents the following materials data: AQ × AP = $150,000; AQ × SP = $145,000; SQ × SP = $152,000. Compute the direct materials quantity variance.
Correct Answer:
$7,000 F
Explanation:
Direct materials quantity variance shows whether actual material usage was more or less than the standard amount for the actual production, valued at the standard price. It is calculated as (AQ − SQ) × SP, which you can compute using the given products: AQ × SP and SQ × SP. AQ × SP = 145,000 and SQ × SP = 152,000, so DMQV = 145,000 − 152,000 = −7,000. A negative result means you used less material than planned, which is favorable. Therefore, the direct materials quantity variance is 7,000 favorable.

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