Question
Kline Company employs a standard cost system that carries direct materials inventory at standard cost. Kline has established the following standards for the prime costs
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Kline Company employs a standard cost system that carries direct materials inventory at standard cost. Kline has established the following standards for the prime costs of one unit of product:
Standard Quantity Standard Price Standard Cost
Direct Materials 5 pounds $3.60 per pound $18.00
Direct Labor 1.25 hours $12.00 per hour 15.00
$33.00
During May, Kline purchased 125,000 pounds of direct material at a total cost of $475,000. The total factory wages for May were $364,000, 90% of which were direct labor. Kline manufactured 22,000 units of product during May, using 108,000 pounds of direct materials and 28,000 direct labor hours.
The direct materials usage (quantity) variance for May is
$7,600 favorable
$5,850 unfavorable
$7,200 unfavorable
$7,200 favorable
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