the answer is C please explain 22) 22) Emerald Marine Stores Company manufacture
ID: 2567852 • Letter: T
Question
the answer is C
please explain
22) 22) Emerald Marine Stores Company manufactures decorative fittings for luxury yachts that require highly skilled labor, and special metallic materials. Emerald uses standard costs to prepare its flexible budget. For the first quarter of 2015, direct material and direct labor standards for one of their popular products were as follows: Direct materials: 1 pound per unit, $12 per pound Direct labor: 4 hours per unit; $15 per hour Emerald produced 5,000 units during the quarter. At the end of the quarter, an examination of the materials records showed that the company used 7,000 pounds of materials and actual total material costs were $98,000 culate the direct materials cost variance. A) $38,000 Unfavorable C) $14,000 Unfavorable B) $14,000 Favorable D) $38,000 FavorableExplanation / Answer
Direct material cost variance = SQ*SP - AQ*AP
Where as SQ represents standard quantity for actual quantity consumed = 1 * 7000 = 7000
SP standard price =$12/pound
AQ actual qty
Ap actual price
AQ*AP=$98,000
So, direct material cost variance SQSP - AQAP
12 * 7000 - 98,000 = - $14,000 Also $14,000 UNFAVORABLE
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