Question
A company uses the following standard costs to produce a single unit of output. DM 7 pounds at $0.60 per pound = $4.20 DL 0.2
A company uses the following standard costs to produce a single unit of output.
DM 7 pounds at $0.60 per pound = $4.20
DL 0.2 hour at $8.00 per hour = $1.60
Manufacturing Overhead 0.2 hours at $3.90 per pound = $0.78
During the latest month, the company purchased and used 67,000 pounds of direct materials at a price of $.90 per pound to produce 10,000 units of output. DL costs for the month totaled $12,900 based on 1,720 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $3,800 and fixed manufacturing overhead incurred was $19,000. Based on this information, the total direct materials cost variance for the month was:
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