Exercise 8-4 Material Variances [LO4] Harmon Household Products, Inc., manufactu

Question

Exercise 8-4 Material Variances [LO4]

Harmon Household Products, Inc., manufactures a number of consumer items for general household use. One of these products, a chopping board, requires an expensive hardwood. During a recent month, the company manufactured 3,400 chopping boards using 2,516 board feet of hardwood. The hardwood cost the company $16,606.

    The company

Harmon Household Products, Inc., manufactures a number of consumer items for general household use. One of these products, a chopping board, requires an expensive hardwood. During a recent month, the company manufactured 3,400 chopping boards using 2,516 board feet of hardwood. The hardwood cost the company $16,606.

Explanation / Answer

1a) standard cost = 3400*0.68*7 = $ 16184

1b)spending variance = 16606-16184 = 422

Unfavorable

2a)material quantity variance = 0.74-0.68 = 0.06

Unfavorable

2b) materials price variance = 7- 16606/2516 = 0.4

favorable

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