Acme Brick Company uses the following rule to determine whether materials usage variances should be investigated:

A materials usage variance will be investigated when the variance is greater than either $5,000 or 10 percent of the standard cost.

During June, the company purchased and used 9,500 pounds of concrete for $5 per pound. It was able to make 20,000 bricks. Its standard quantity of materials allowed is 0.45 pound of concrete per brick at a standard price of $6 per pound.

Required:

A.  Determine Acme's material usage variance and whether it is favorable or unfavorable.
 

B.  Should the variance be investigated?

Answer rating: 100% (QA)

A To calculate the material usage variance we first need to find out how mu... View the full answer