Bulluck Corporation makes a product with the following standard costs: The compa

Question

Bulluck Corporation makes a product with the following standard costs:

The company reported the following results concerning this product in July.

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 July is:

Multiple Choice

$1,044 U

$870 U

$870 F

$1,044 F

Standard Quantity or Hours Standard Price or Rate Direct materials 3.5 grams $ 1.00 per gram Direct labor 0.7 hours $ 11.00 per hour Variable overhead 0.7 hours $ 2.00 per hour

Explanation / Answer

Material quantity variance = (Standard quantity-actual quantity)Standard price

                                      = (3000*3.5-11370)1

Material quantity variance = 870 U

so answer is b) $870 U

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