Question
A company uses the following standard costs to produce a single unit of output. Direct materials 7 pounds at $0.80 per pound = $ 5.60
A company uses the following standard costs to produce a single unit of output.
Direct materials | 7 pounds at $0.80 per pound | = | $ | 5.60 | |
Direct labor | 0.6 hour at $10.00 per hour | = | $ | 6.00 | |
Manufacturing overhead | 0.6 hour at $4.20 per hour | = | $ | 2.52 | |
During the latest month, the company purchased and used 67,000 pounds of direct materials at a price of $1.10 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $54,340 based on 5,720 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $22,200 and fixed manufacturing overhead incurred was $13,000. Based on this information, the total direct materials cost variance for the month was:
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A. $17,700 unfavorable
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B. $17,700 favorable
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C. $20,100 favorable
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D. $20,100 unfavorable
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E. $2,400 favorable
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