Majer Corporation makes a product with the following standard costs Standard Cos

Question

Majer Corporation makes a product with the following standard costs Standard Cost Per Standard Quantity or Hours Standard Price or Rate $ 3.00 per ounce 10.00 per hour $ 3.00 per hour Unit Direct materials Direct labor Variable overhead 6.5 ounces 0.7 hours 0.7 hours $19.50 7.00 s 2.10 The company reported the following results concerning this product in February Originally budgeted output Actual output Raw materials used in production Actual direct labor-hours Purchases of raw materials Actual price of raw materials Actual direct labor rate Actual variable overhead rate 5,600 units 5,200 units 31,100 ounces 7,990 hours 33,500 ounces $ 122.90 per ounce $ 132.40 per hour $ 5.10 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 February is.

Explanation / Answer

Material quantity variance AQ (a) SQ (b) Variance (c=b-a) SP (d) Total variance (e=c*d) F/U Material quantity variance = (AQ-SQ)*SP AQ = Actual quantity purchased= 33500 SQ = Standard quantity = 6.5*5200 = 33800 SP = Standard price per unit = $122.9 F= Favourable U = Unfavourable Material quantity variance AQ (a) SQ (b) Variance (c=b-a) SP (d) Total variance (e=c*d) F/U 33500 33800 300 122.9 36870 F

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