Question
ABC Enterprises purchased 57,500 pounds (cost = $385,250) of direct material to be used in the manufacture of the company's sole product. According to the
ABC Enterprises purchased 57,500 pounds (cost = $385,250) of direct material to be used in the manufacture of the company's sole product. According to the production specifications, each completed unit requires 4 pounds of direct material. Quantity Variance is $33,300 UF. Direct materials consumed by the end of the period totaled 52,500 pounds in the manufacture of 12,000 finished units.
An examination of ABC's payroll records revealed that the company worked 20,000 labor hours (cost = $315,000) during the period, and specifications called for each completed unit requiring 2.5 hours of labor at a standard cost of $14.76 per hour. Assume that the company computes variances at the earliest point in time. ABC's direct-material price variance was:
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