Cheerios is a brand of cereal manufactured by General Mills in the United States consisting of pulverized oats. General Mills management has established the following standards: Standard Quantity of Standard Price or Hours Rate Direct materials 3.5 grams $ 1.00 per gram Direct labor 0.7 hours $ 11.00 per hour Variable overhead 0.7 hours $ 2.00 per hour The company reported the following results concerning this product in July, 3,000 units Actual output Raw materials used in production 11,370 grams 1910 hours Actual direct labor hours 12 100 grams Purchases of raw materials $ 120 per gram Actual price of raw materials purchased $ 11.40 per hour Actual direct labor rate $ 2.10 per hour Actual variable overhead rate The company applies variable overhead on the basis of direct labor hours. The direct materials purchases variance is computed when the The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for July is: Material Price Variance = (AP-SP). AQP AP = actual price per unit of material SP standard price per unit of material AQP-actual quantity of material purchased Material Quantity Variance - (AQU - SQ) SP AQU - actual quantity of material used SQ = standard quantity of material for the actual level of production SP = standard price per unit of material Multiple Choice O $870 F O $870 U $1,044 U $1,044 F