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A company uses the following standard costs to produce a single unit of output. Direct materials 6 pounds at $0.80 per pound=$4.80 Direct labor 0.6

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

Direct materials 6 pounds at $0.80 per pound=$4.80

Direct labor 0.6 hour at $8.00 per hour=$4.80

Manufacturing overhead 0.6 hour at $4.00 per hour=$2.40

During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $44,460 based on 5,850 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $21,000 and fixed manufacturing overhead incurred was $13,000. Based on this information, the total direct materials cost variance for the month was:

Multiple Choice

  • $10,000 unfavorable
  • $10,000 favorable
  • $11,600 favorable
  • $11,600 unfavorable
  • $1,600 favorable

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