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Use the following to answer questions 7-9: Fillepea Industries employs a standar

ID: 2444716 • Letter: U

Question

Use the following to answer questions 7-9: Fillepea Industries employs a standard cost system Fillepea has established the following standards for the costs of one unit of product. Standard Standard Quantity Price Direct materials 8 pounds $1.80 per pound Direct labor 0.25 hour $8.00 per hour During May, Fillepea purchased 160,000 pounds of direct material at a total cost of $304,000. The total direct labor wages for May were $37,800. Fillepea manufactured 19,000 units of product during May using 142,500 pounds of direct material and 5,000 direct labor hours. 7. The direct material purchase price variance for May is: a. $16,000 Favorable. b. $16,000 Unfavorable. c. $14,250 Favorable. d. $14,250 Unfavorable. e. $1,100 Unfavorable. 8. The direct material guantiyy variance for May is: a. $14,400 Unfavorable. b. $1,100 Favorable. c. $17,100 Unfavorable. d. $17,100 Favorable. e. $1,100 Unfavorable. 9. The direct labor efficiency variance for May is: a. $2,200 Favorable. b. $2,000 Favorable. c. $2,000 Unfavorable. d. $1,800 Unfavorable. e. $2,200 Unfavorable.

Explanation / Answer

7. Direct Material Purchase Variance = (Standard Price - Actual Price) x Actual Quantity

Standard Price = 1.80 per Pound

Actual Price = 304,000 / 160,000 = $1.90 per Pound

Actual Quantity = 160,000 pound

MPV = (1.80 - 1.90) x 160,000 = $16,000 Unfavorable

So, the correct option is $16,000 Unfavorable

8. Direct Material Quantity Variance = (Standard Quantity - Actual Quantity) x Standard Price

Direct Material Quantity Variance = (152,000 - 142,500) x 1.80 = $17,100 Favorable

So, the correct option is favorable $17,100.

9. Direct Labor Efficiency Variance = (Standard Hour - Actual Hour) x Standard Rate

DLH = (4,750 - 5,000) x 8 = 2,000 Unfavorable

So, the correct option is $2,000 Unfavorable.

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