Questions: QUESTION 16 2.5 points Parallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. The direct materials quantity variance is: Direct materials standard (7 Kilogram 2 / Kilogram ) 14 per finished unit Actual cost of materials purchased 322,500 Actual direct materials purchased and used 150,000 Kilogram 50,000 unfavorable. 50,000 favorable. 22,500 unfavorable. 22,500 favorable.

Solution Steps

To solve for the direct materials quantity variance, we need to follow these steps:

1. Calculate the Standard Quantity Allowed (SQA): Multiply the number of units produced by the standard quantity of materials per unit.
2. Calculate the Actual Quantity Used (AQU): This is given as the actual direct materials purchased and used.
3. Calculate the Standard Price (SP): This is given as the cost per kilogram.
4. Compute the Direct Materials Quantity Variance: Use the formula:
   \[ \text{Direct Materials Quantity Variance} = (\text{SQA} - \text{AQU}) \times \text{SP} \]

The Standard Quantity Allowed (SQA) is calculated as follows: \[ \text{SQA} = \text{units produced} \times \text{standard quantity per unit} = 25000 \times 7 = 175000 \text{ kg} \]

The Direct Materials Quantity Variance (DMQV) is computed using the formula: \[ \text{DMQV} = (\text{SQA} - \text{AQU}) \times \text{SP} \] Substituting the values: \[ \text{DMQV} = (175000 - 150000) \times 2 = 25000 \times 2 = 50000 \]

Since the calculated variance is positive, it indicates that the actual quantity used was less than the standard quantity allowed, resulting in a favorable variance.

Final Answer