Crane Industries uses a standard cost system in which direct material is carried at standard cost. Crane has established the following standards: a standard quantity of 10 pounds per unit and a standard price of $1.80 per pound. During January, Crane purchased 172,000 pounds of direct material at a cost of $328,000 and used 199,500 pounds in the production of 21,100 units.

Calculate the direct materials quantity variance and indicate whether the variance is favorable or unfavorable.

The direct materials quantity variance is -11,500 pounds. Since the actual quantity used is less than the standard quantity, the variance is unfavorable.

To calculate the direct materials quantity variance, we need to compare the actual quantity of direct material used with the standard quantity that should have been used based on the production level.

First, let's calculate the standard quantity of direct material that should have been used:
Standard quantity per unit: 10 pounds
Number of units produced: 21,100 units
Standard quantity = Standard quantity per unit × Number of units produced
Standard quantity = 10 pounds/unit × 21,100 units
Standard quantity = 211,000 pounds

Next, let's calculate the direct materials quantity variance:
Actual quantity used: 199,500 pounds
Standard quantity: 211,000 pounds

Direct materials quantity variance = Actual quantity used - Standard quantity
Direct materials quantity variance = 199,500 pounds - 211,000 pounds
Direct materials quantity variance = -11,500 pounds

The direct materials quantity variance is -11,500 pounds. Since the actual quantity used is less than the standard quantity, the variance is unfavorable.

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