Question 1

Classy Designs manufactures decorative chains for all types of clothing. They use standard costs to prepare its flexible budget. For the second quarter of 20x8, direct material and direct labor standards for the companys most popular product were as follows:

Direct material: 3 pounds per unit; $4 per pound

Direct labor: 4 hours per unit; $20 per hour

During the quarter, Classy Designs produced 5,000 units. At the end of the quarter, direct labor costs recorded were $375,000 for 25,000 direct labor hours used.

Based on these data, what is the direct labor cost variance?

1. $125,000 U
2. $125,000 F
3. $300,000 U
4. $300,000 F
5. None of the answers is correct

Question 2

Turner Corporation recently purchased 42,000 gallons of direct material at $6.60 per gallon. By the end of the period, usage amounted to 40,000 gallons. If the standard cost is $7.30 per gallon and the company computes variances at the earliest point possible, the direct-material price variance would be:

1. $29,400 U.
2. $1,400 F.
3. $28,000 F.
4. $28,000 U.
5. $29,400 F.