15. ABC, Inc. produces a product requiring 8 pounds of material costing $3.60 pe
ID: 2456928 • Letter: 1
Question
15. ABC, Inc. produces a product requiring 8 pounds of material costing $3.60 per pound. During February, ABC purchased 4,200 pounds of material for $14,112 and used the material to produce 500 products. What was the materials price variance for February? (Answer: $1,008 favorable)
20. Hershey Company has a standard of 1.5 pounds of materials per unit, at $6 per pound. In producing 2,000 units, Hershey’s used 3,100 pounds of materials at a total cost of $17,980. Hershey’s materials price variance is: (Answer: $620 favorable)
21. Hershey’s has a standard of 1.5 pounds of materials per unit, at $6 per pound. In producing 2,000 units, Hershey’s used 3,100 pounds of materials at a total cost of $17,980. Hershey’s materials quantity variance is: (Answer: $600 unfavorable)
22. Hershey’s has a standard of 2 hours of labor per unit, at $18 per hour. In producing 2,000 units, Hershey’s used 3,850 hours of labor at a total cost of $70,455. Hershey’s total labor variance is: (Answer: $1,545 favorable)
Explanation / Answer
15) Price variance = AQ* AP - AQ* SP)
= 14112 - 4200* 3.60
= 14112 - 15120
= - 1008 (F)
20)Price variance = 17980 - (3100 * 6)
= 17980 - 18600
= - 620 (F)
21)Material quantity variance = SR*AQ - SR*SQ
= 6*3100 - 6*(1.5*2000)
= 18600 - 18000
= 600(U)
22)Total labor variance = AH *AR - SH*SR
= 70455 - (2 *2000 ) * 18
= 70455 - 4000*18
= 70455 - 72000
= - 1545(F)
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