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 orlStandard Price orStandard Cost Direct materials Direct labor Variable overhead Hours 4.1 grams 1.6 hours 1.6 hours Rate $7.00 per gram $16.00 per hour $7.00 per hour Per Unit $28.70 $25.60 $11.20 The company reported the following results concerning this product in June Originally budgeted output Actual output Raw materials used in production Actual direct labor-hours Purchases of raw materials Actual price of raw materials purchased Actual direct labor rate Actual variable overhead rate 7100 units 7,000 units 28,350 grams 31,500 grams $16.90 per hour 4.200hours $710 per gram $6.70 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 price variance for June is

Explanation / Answer

Materials price variance = AQ (AP - SP)

= 31,500 grams ($7.10 per gram - $7.00 per gram)

= $3,150 U

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