The Apoundright Company uses standard costing and has established the following

Question

The Apoundright Company uses standard costing and has established the following standards for its single product:

Direct materials: 2 gallons at $3 per gallon
Direct labor: 0.5 hours at $8 per hour
Variable overhead: 0.5 hours at $2 per hour

During November, the company made 4,000 units and incurred the following costs:

Direct materials purchased: 8,100 gallons at $3.10 per gallon
Direct materials used: 7,600 gallons
Direct labor used: 2,200 hours at $8.25 per hour
Actual variable overhead: $4,175

The company applies variable overhead to products on the basis of standard direct labor-hours.
7. The materials price variance for November was:
A. $2,310 U
B. $2,310 F
C. $810 U
D. $810 F

8. The materials quantity variance for November was:
A. $1,200 U
B. $1,200 F
C. $300 U
D. $1,500 F
9. The labor rate variance for November was:
A. $1,050 U
B. $550 U
C. $2,150 U
D. $2,150 F

10. The labor efficiency variance for November was:
A. $1,050 U
B. $550 U
C. $1,600 F
D. $1,600 U

Explanation / Answer

7. The materials price variance for November was: A. $2,310 U B. $2,310 F C. $810 U D. $810 F 8,100*(3.10 – 3) = 810. Answer: C. $810 unfavorable 8. The materials quantity variance for November was: A. $1,200 U B. $1,200 F C. $300 U D. $1,500 F 3(7,600 – 4,000*2) = -1200 Answer: B. $1,200 favorable 9. The labor rate variance for November was: A. $1,050 U B. $550 U C. $2,150 U D. $2,150 F 2,200*(8.25 – 8) = 550 Answer: B. $550 unfavorable 10. The labor efficiency variance for November was: A. $1,050 U B. $550 U C. $1,600 F D. $1,600 U 8*(2,200 – 0.5*4,000) = 1600 Answer: D. $1,600 unfavorable

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