Tower Company planned to produce 3,000 units of its single product, Titactium, during November. The standards for one unit of Titactium specify six pounds of materials at $.30 per pound. Actual production in November was 3,100 units of Titactium. There was a Unfavorable materials price variance of $380 and an Favorable materials quantity variance of $120. Based on these variances, one could conclude that: a. more materials were purchased than were used. b. more materials were used than were purchased. c. the actual cost per pound for materials was less than the standard cost per pound. d. the actual usage of materials was less than the standard allowed.

d. the actual usage of materials was less than the standard allowed.

Explanation:

For evaluating the price or quantity variance, we do not take into consider the number of quantity purchased, instead we focus on the number of quantity actually being used for manufacturing the targeted unit. So, we can easily eliminate the first two options.

Now, as per the question, there was an unfavourable material price variance of $380. That means, the budgeted price for the material is less than the actual price for manufacturing the product. However, the third option exactly contradicts the above situation.

The correct option is (d), because the actual usage of material was less than the budgeted one, which gives the favourable quantity variance of $120.