Majer Corporation makes a product with the following standard costs: Standard Co

Question

Majer Corporation makes a product with the following standard costs: Standard Cost Per Standard Quantity or Hours Standard Price or Rate $ 5.00 per ounce $ 11.00 per hour 3.50 per hour Unit Direct materials Direct labor Variable overhead 2.0 ounces 0.7 hours 0.7 hours $10.00 $ 7.70 s 2.45 The company reported the following results concerning this product in February Originally budgeted output Actual output Raw materials used in production Actual direct labor-hours Purchases of raw materials Actual price of raw materials Actual direct labor rate Actual variable overhead rate 5,600 units 5,400 units 8,400 ounces 3,980 hours 10,000 ounces $ 4.75 per ounce $ 11.70 per hour $ 3.95 per hour The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The materials price variance for February is: Multiple Choice $2,500 F $14,100 F $2,500 U $14,100 U

Explanation / Answer

Materials price variance = 10000*(4.75-5)= $2500 F Option 1 is correct

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