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21) Ravena Labs., Inc. makes a single product which has the following standards: Direct materials: 2.5 ounces at $20 per ounce Direct labor: 1.4 hours

21) Ravena Labs., Inc. makes a single product which has the following standards:

Direct materials: 2.5 ounces at $20 per ounce

Direct labor: 1.4 hours at $12.50 per hour

Variable manufacturing overhead: 1.4 hours at 3.50 per hour

Variable manufacturing overhead is applied on the basis of standard direct labor-hours. The following data are available for October:

  • 3,750 units of compound were produced during the month.
  • There was no beginning direct materials inventory.
  • Direct materials purchased: 12,000 ounces for $225,000.
  • The ending direct materials inventory was 2,000 ounces.
  • Direct labor-hours worked: 5,600 hours at a cost of $67,200.
  • Variable manufacturing overhead costs incurred amounted to $18,200.
  • Variable manufacturing overhead applied to products: $18,375.

The materials price variance for October is:

Multiple Choice

  • $25,000 Favorable

  • $15,000 Unfavorable

  • $15,000 Favorable

  • $25,000 Unfavorable

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