Landram Corporation makes a product with the following standard costs: Standard
ID: 2460045 • Letter: L
Question
Landram Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 2.0 liters $7.00 per liters Direct labor 1.7 hours $13.00 per hour Variable overhead 1.7 hours $7.00 per hour The company produced 4,700 units in April using 10,350 liters of direct material and 2,330 direct labor-hours. During the month, the company purchased 10,920 liters of the direct material at $7.35. per liter. The actual direct labor rate was $13.90 per hour and the actual variable overhead rate was $6.70 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 quantity variance for April is: $6,983 U $6,983 F $6,650 F $6,650 U
Explanation / Answer
Material quantity variance:
= Standard quantity×Standard cost per unit- Actual quantity×Standard cost per unit
= 4,700×2×$7-10,350×$7
= $6,650 U
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