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

Question

Hurren Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 5.2 grams $6.00 per gram $31.20 Direct labor 1.5 hours $17.00 per hour $25.50 Variable overhead 1.5 hours $6.00 per hour $9.00 The company reported the following results concerning this product in June. Originally budgeted output 5,800 units Actual output 5,700 units Raw materials used in production 28,460 grams Actual direct labor-hours 5,300 hours Purchases of raw materials 32,600 grams Actual price of raw materials purchased $6.10 per gram Actual direct labor rate $17.90 per hour Actual variable overhead rate $5.70 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 June is:

Explanation / Answer

Materials quantity Variance = (SQ - AQ) X SR SQ = 5.20 Grams X 5700 units = 29640 grams SR = $6 per Hram AQ = 28460 grams Materials quantity Variance = (29640 -28460) X $6 = $7080 (F)

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