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A company budgeted $200,000 for direct materials but actually spent $220,000. Wh
A company budgeted $200,000 for direct materials but actually spent $220,000. What is the direct materials variance?
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Practice Questions
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Q1
A company budgeted $200,000 for direct materials but actually spent $220,000. What is the direct materials variance?
$20,000 Favorable
$20,000 Unfavorable
$40,000 Favorable
$40,000 Unfavorable
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Direct materials variance = Actual Cost - Budgeted Cost = $220,000 - $200,000 = $20,000 Unfavorable.
Questions & Step-by-step Solutions
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Q
Q: A company budgeted $200,000 for direct materials but actually spent $220,000. What is the direct materials variance?
Solution:
Direct materials variance = Actual Cost - Budgeted Cost = $220,000 - $200,000 = $20,000 Unfavorable.
Steps: 5
Show Steps
Step 1: Identify the budgeted cost for direct materials, which is $200,000.
Step 2: Identify the actual cost spent on direct materials, which is $220,000.
Step 3: Calculate the direct materials variance by subtracting the budgeted cost from the actual cost: $220,000 - $200,000.
Step 4: Determine the result of the calculation, which is $20,000.
Step 5: Since the actual cost is higher than the budgeted cost, label the variance as 'Unfavorable'.
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