1. Solly Corporation produces a product for national distribution. Standards for the product are:

• Materials: 12 ounces per unit at 60 per ounce.
• Labor: 2 hours per unit at $8 per hour.

During the month of December, the company produced 1,000 units. Information for the month follows:

• Materials: 14,000 ounces purchased and used at a total cost of $7,700.
• Labor: 2,500 hours worked at a total cost of $20,625.

The materials quantity variance is:

Multiple Choice

• $1,200 U

• $1,100 U

• $1,100 F

• $1,200 F

2. Kartman Corporation makes a product with the following standard costs:

	Standard Quantity or Hours			Standard Price or Rate			Standard Cost Per Unit
Direct materials		6.5	pounds	$	7.00	per pound	$	45.50
Direct labor		0.6	hours	$	24.00	per hour	$	14.40
Variable overhead		0.6	hours	$	4.00	per hour	$	2.40

In June the company's budgeted production was 3,400 units but the actual production was 3,500 units. The company used 22,150 pounds of the direct material and 2,290 direct labor-hours to produce this output. During the month, the company purchased 25,400 pounds of the direct material at a cost of $170,180. The actual direct labor cost was $57,021 and the actual variable overhead cost was $8,931.

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 labor rate variance for June is:

Multiple Choice

• $1,890 F

• $2,061 U

• $2,061 F

• $1,890 U