oe Oceanside Marine Company manufacturos special metalic materials and deco iv y

Question

oe Oceanside Marine Company manufacturos special metalic materials and deco iv year, direct materials and drect labor standards for one of their popular producds were as follows C faings for hooury yaches that require highly skilled labor Ocesanside uses standard cests to prepae s eble budget For the frt qsarer of te Direct materials 1 pound per unit $11 per pound Direct labor 2 hours per unit, $19 par hour Oceanside produced 1,000 units during the quarter At the ond of the qaarter, an examination of the direct matorials recsrds showed hat the company uned 7,500 pounds ef drect materials and achual sotal maienals co $98,700 What is the direct materials cost variance? (Hound any intermediate caloulations to the nearest cent, and your fienal answer to the nearest dollar ) O A. $2,160 Favorable O B. 52,160 Unfavorable OC. $16,200 Favorable OD, $16200Unfavorable

Explanation / Answer

Direct Material cost variance = (Actual cost - Standard cost ) * Actual quantity

Actual cost per unit = $98,700 / 7,500 pounds i.e., $13.16 per pound

standard cost per unit = $11 per pound

actual quantity = 7,500 pounds.

Direct material cost variance = ($13.16 - $11)*7,500 i.e., $16,200 Unfavorable. The option is D.

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