This Question: 1 pt 2O of 40 (15 complete) ? This Test: 40 pts possible Allen Bo

Question

This Question: 1 pt 2O of 40 (15 complete) ? This Test: 40 pts possible Allen Boating Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Allen uses standard costs to prepare its flexible budget. For the first quarter of the year, direct materials and direct labor standards for one of their popular products were as follows: Direct materials: 2 pound per unit $12 per pound Direct labor: 4 hours per unit; $17 per hour Allen produced 2,000 units during the quarter. At the end of the quarter, an examination of the direct materials records showed that the company used 7,500 pounds of direct materials and actual total materials costs were $99,600. What is the direct materials efficiency variance? OA. $42,000 U 0 B. $42,000 F OC. $24,000 F OD· $24,000 U Click to select your answer. 28

Explanation / Answer

Correct Answer (A) $42000 U

Calculations

Actual DATA for

2000

units

Quantity (AQ)

Rate (AR)

Actual Cost

Direct Material

7500

$            13.280

$           99,600.00

Standard DATA for

2000

units

Quantity (SQ)

Rate (SR)

Standard Cost

Direct Material (2000 *2)

4000

$              12.00

$           48,000.00

Material Quantity Variance

(

Standard Quantity

-

Actual Quantity

)

x

Standard Rate

(

4000

-

7500

)

x

$                        12.00

$-42000

Variance

42000

Unfavorable-U

Actual DATA for

2000

units

Quantity (AQ)

Rate (AR)

Actual Cost

Direct Material

7500

$            13.280

$           99,600.00

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