Standard Quantity or Hours Direct materials 5.2 pounds 3.00 per pound Standard P

Question

Standard Quantity or Hours Direct materials 5.2 pounds 3.00 per pound Standard Price or Rate Standard Cost $15.60 $2.00 Direct labor 0.4 hours 5.00 per hour During the most recent month, the following activity was recorded a. Ten thousand pounds of material were purchased at a cost of $2.90 per pound b. The company produced only 1,000 units, using 8,000 pounds of material. (The rest of the mate purchased remained in raw materials inventory c. Five hundred hours of direct labor time were recorded at a total labor cost of $6,000 Required Compute the materials price and quantity variances for the month. (Do not round inte calculations. Indicate the effect of each variance by selecting "F" for favorable, u" for untf and "None" for no effect (i.e., zero variance) Direct materials price variance Direct materials quantity variance

Explanation / Answer

Direct materials price variance = 10000*(2.9-3)= $1000 F Direct materials quantity variance=3*(8000-1000*5.2)= $8400 U

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