Beni Inc. manufactures antennas for television sets. The company has a standard costing system where all the overhead costs are allocated based on direct labour hours.

Beni Inc. usually pays its metal used at a price of $5 /kg but the purchasing manager was able to obtain a 15% savings this year by changing suppliers. Beni therefore spent an actual amount of $1,351,500 for its DM during the year. It however seems that the quality of the direct materials was altered, because the company had to use 0.8 kg more metal than expected to produce each unit.

Considering that 120,000 units were actually manufactured, what is the direct material cost variance (sum of DM quantity variance and DM price variance) for the year ended on December 31?

• A. None of the above
• B. $241,500 U
• C. $718,500 U
• D. $480,000 U
• E. $238,500 F