If a company budgeted $200,000 for direct materials but actually spent $220,000, what is the direct materials variance?
Practice Questions
1 question
Q1
If 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
Direct Materials Variance = Actual Cost - Budgeted Cost = $220,000 - $200,000 = $20,000 (Unfavorable)
Questions & Step-by-step Solutions
1 item
Q
Q: If 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
Step 1: Identify the budgeted cost for direct materials. In this case, it is $200,000.
Step 2: Identify the actual cost spent on direct materials. Here, it is $220,000.
Step 3: Calculate the direct materials variance by subtracting the budgeted cost from the actual cost. This means you do $220,000 (actual) - $200,000 (budgeted).
Step 4: The result of the calculation is $20,000.
Step 5: Determine if the variance is favorable or unfavorable. Since the actual cost is higher than the budgeted cost, this is considered an unfavorable variance.
