Hurren Corporation makes a product with the following standard costs The company

Question

Hurren Corporation makes a product with the following standard costs

The company reported the following results concerning this product in June.

The company applies variable overhead on the basis of direct labor-hours. The direct materials price variance is computed when the materials are purchased.

The materials price variance for June is:

1.3,300 U

2.$2,872 F

3.$2,872 U

4.$3,300 F

   Inputs Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit   Direct materials 5.6 grams    $4.00 per gram $22.40             Direct labor 1.9 hours    $19.00 per hour $36.10             Variable overhead 1.9 hours    $4.00 per hour 7.60          

Explanation / Answer

3.$2,872 U

Direct material price Variance = (AP-SP)*AQ = (4.1- 4) * 28500 = 2850 Since it is positive , Hence Unfavorable. Now, Nearest available option in answers provided is $2,872 U . So , this is the answer.

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