Gilder Corporation makes a product with the following standard costs: Standard Q

Question

Gilder Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 4.0 grams $8.00 per gram $32.00 Direct labor 1.5 hours $15.00 per hour $22.50 Variable overhead 1.5 hours $8.00 per hour $12.00 The company reported the following results concerning this product in June. Originally budgeted output 7,300 units Actual output 7,200 units Raw materials used in production 28,340 grams Purchases of raw materials 31,400 grams Actual direct labor-hours 4,100 hours Actual cost of raw materials purchases $254,340 Actual direct labor cost $65,190 Actual variable overhead cost $31,570 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 June is:

Explanation / Answer

Material Quantity Variance = actual quantity - standard quantity *standard price

                                         ( 28340 - 7200*4) * 8 = -3680 favorable

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