Shade Company adopted a standard cost system several years ago. The standard costs for direct labor and direct materials for its single product are as follows: Materials (5 kilograms × $12/kilogram) = $60/unit; direct labor (3.5 hours/unit × $20/hour) = $70/unit. All materials are issued at the beginning of processing. The operating data shown below were taken from the records for December:

In-process beginning inventory None In-process ending inventory—80% complete as to labor 1,110units Units completed during the period 7,000units Budgeted output 7,650units Purchases of materials (in kilograms) 47,500 Total actual direct labor cost incurred$554,120 Direct labor hours worked (AQ) 28,000hours Materials purchase-price variance$9,025favorable Increase in materials inventory in December 5,300kilograms

The direct materials usage variance for December, to the nearest dollar, was:

$19,800 unfavorable
1. Actual units of production with respect to materials = no. of units completed during the period + equivalent units of output in ending WIP inventory with respect to materials = 7,000 units (given) + 1,110 units (given) = 8,110 units.

2. Standard quantity of materials allowed for output of the period (with respect to materials) = SQ = 8,110 units × 5 kilograms/unit (given) = 40,550 standard kilograms allowed for production.

3. No. of kilograms used (AQ) = kilograms purchased ? increase in materials inventory = (47,500 (given) ? 5,300 (given)) kilograms = 42,200 kilograms

4. Direct materials usage variance = (AQ ? SQ) × SP = (42,200 ? 40,550) kilograms × $12/kilogram (given) = 1,650 kilograms × $12/kilogram = $19,800U (rounded to the nearest dollar). Note: the variance here is unfavorable (U) because the actual quantity of materials used during the period (42,200 kilograms) > standard quantity of materials allowed for units produced during the period (40,550 kilograms).