Question
Hart Company made 3,200 bookshelves using 22,200 board feet of wood costing $290,820. The company's direct materials standards for one bookshelf are 8 board feet
Hart Company made 3,200 bookshelves using 22,200 board feet of wood costing $290,820. The company's direct materials standards for one bookshelf are 8 board feet of wood at $13.00 per board foot.
AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price
(1) Compute the direct materials price and quantity variances and classify each as favorable or unfavorable.
(2) Hart applies management by exception by investigating direct materials variances of more than 5% of actual direct materials costs. Which direct materials variances will Hart investigate further?
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