Question
Arrow Industries employs a standard cost system in which direct materials inventory is carried at standard cost. Arrow has established the following standards for the
Arrow Industries employs a standard cost system in which direct materials inventory is carried at standard cost. Arrow has established the following standards for the prime costs of one unit of product. |
Standard Quantity | Standard price | Standard cost | |||
Direct Materials | 9 pounds | $ | 2.00 per pound | $ | 18.00 |
Direct Labor | 0.25 hour | $ | 9.00 per hour | $ | 2.25 |
$ | 20.25 | ||||
During November, Arrow purchased 189,800 pounds of direct materials at a total cost of $385,900. The total factory wages for November were $46,800, 90% of which were for direct labor. Arrow manufactured 20,000 units of product during November using 143,500 pounds of direct materials and 5,090 direct labor hours. |
What is the direct materials efficiency (quantity) variance for November? |
$73,000 favorable.
$6,300 favorable.
$5,670 favorable.
$65,700 favorable.
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