Beakins Company produces a single product. The standard and actual costs for the

Question

Beakins Company produces a single product. The standard and actual costs for the recent period follow:

Standard Costs

Direct materials (4 yards @ $5 per yard)

$20

Direct labor (1.5 hours @ $10 per hour)

$15

Variable Manufacturing overhead (1.5 hours @ $4 per hour)

$  6

Actual Costs

Direct materials purchased (6,000 yards)

$28,500

Direct materials used in production

5,000 yds

Direct labor cost incurred (2,100 hours)

$17, 850

Variable manufacturing overhead cost incurred

$10,080

Units produced

1,200

The company records are variances at the earliest possible point in time. Variable manufacturing overhead costs are applied to products on the basis of direct labor hours.

The material quantity variance for the period is:

$950 U

$5,000 F

$1,000 U

$6,000 F

Standard Costs

Direct materials (4 yards @ $5 per yard)

$20

Direct labor (1.5 hours @ $10 per hour)

$15

Variable Manufacturing overhead (1.5 hours @ $4 per hour)

$  6

Actual Costs

Direct materials purchased (6,000 yards)

$28,500

Direct materials used in production

5,000 yds

Direct labor cost incurred (2,100 hours)

$17, 850

Variable manufacturing overhead cost incurred

$10,080

Units produced

1,200

Explanation / Answer

Material quantity variance = (Standard quantity - Actual quantity used) x Standard rate
= {(1,200 x 4) - 5,000) x $5
= $1,000 Unfavorable

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