Kibodeaux Corporation makes a product with the following standard costs: The com

Question

Kibodeaux Corporation makes a product with the following standard costs:

    

    
The company budgeted for production of 2,600 units in June, but actual production was 2,700 units. The company used 25,650 liters of direct material and 760 direct labor-hours to produce this output. The company purchased 27,650 liters of the direct material at $4.90 per liter. The actual direct labor rate was $16.50 per hour and the actual variable overhead rate was $2.70 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:

$960 F

$1,350 U

$960 U

$1,350 F

Kibodeaux Corporation makes a product with the following standard costs:

Explanation / Answer

Actual quantity is less than standard quantity. so it will be favourable

Material Quantity variance = Standard Price * (Actual Quantity used - Standard Quantity) Material Quantity variance = $5 * (25,650 - (2,700*9.6)) = $1,350 F

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