Milton Company uses a standard cost system.

Standards call for 2 direct labor hours per widget. The standard labor rate is $10 per hour.

Four pounds of material are needed for each widget at a standard cost of $2.25 per pound.

Milton actually produces 17,000 widgets during the year.

Direct labor costs are $359,100 for 34,200 hours.

Milton purchases 70,000 pounds of materials at $2.50 per pound, and used 65,400 pounds of those materials

(the rest are in inventory at the end of the year)

For direct materials, what is the price variance? Answers are labeled as favorable (F) or unfavorable (U).

A. $16,350 U

B. $18,000 U

C. $10,500 U

D. $17,000 U

E. $17,500 U

Using the above problem ALSO ANSWER THIS...

To compute that variance, you should have defined AQ as actual quantity of materials purchased (70,000

lbs.).However, when there is a difference between amount purchased and amount used, AQ is defined as actual

quantity used for the materials usage variance.

What will be AQ be for the materials usage variance in this problem?

A. 65,400 pounds

B. 68,000 pounds

C. 70,000 pounds