Question
Machine Builders Inc. adopted a standard cost system several years ago that it uses in conjunction with its process cost system. The per-unit standard costs
Machine Builders Inc. adopted a standard cost system several years ago that it uses in conjunction with its process cost system. The per-unit standard costs for direct materials and direct labor for its single product are as follows:
Materials: | (7 kilograms $10 per kilogram) | $ | 70 | |
Labor: | (3 hours $22 per hour) | $ | 66 | |
All materials are issued at the beginning of processing. The operating data shown below were taken from the records for July:
In-process beginning inventory | none | |||
In-process ending inventory90% complete as to labor | 1,100 | units | ||
Units completed during the month | 7,740 | units | ||
Budgeted output | 8,600 | units | ||
Purchases of materials, in kilograms (AQ) | 33,000 | |||
Total actual labor costs incurred | $ | 466,000 | ||
Direct labor hours worked (AQ) | 22,000 | hours | ||
Materials purchase-price variance | $ | 2,900 | unfavorable | |
Increase in materials inventory in July | 1,300 | kilograms | ||
Beginning inventory of materials | 0 | kg. | ||
The sales volume variance, measured in terms of direct labor cost, for July (to the nearest dollar) was:
Multiple Choice
$8,580 favorable.
$58,980 unfavorable.
$73,380 unfavorable.
$52,380 unfavorable.
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