A company uses the following standard costs to produce a single unit of output.

Question

A company uses the following standard costs to produce a single unit of output.

During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.20 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $36,729 based on 4,770 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $16,500 and fixed manufacturing overhead incurred was $14,000. Based on this information, the direct materials price variance for the month was:

8,000U

13,600F

2,000F

11,600U

13,600U

Direct materials 6 pounds at $1.00 per pound = $ 6.00 Direct labor 0.5 hour at $8.00 per hour = $ 4.00 Manufacturing overhead 0.5 hour at $4.10 per hour = $ 2.05

Explanation / Answer

Solution:

Standard rate of pound = $1

Actual rate of pound = $1.20

Actual quantity of pound consumed = 58000 pound

Direct material price variance = (SR - AR) * AQ = (1.20 - 1) * 58000 = $11,600 U

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.