Question 5

Shade Company adopted a standard cost system several years ago. The standard costs for direct labor and direct materials for its single product are as follows: Materials (5 kilograms $12/kilogram) = $60/unit; direct labor (3.5 hours/unit $20/hour) = $70/unit. All materials are issued at the beginning of processing. The operating data shown below were taken from the records for December:

In-process beginning inventory		None
In-process ending inventory80% complete as to labor		1,070	units
Units completed during the period		6,920	units
Budgeted output		7,530	units
Purchases of materials (in kilograms)		45,500
Total actual direct labor cost incurred	$	547,308
Direct labor hours worked (AQ)		27,600	hours
Materials purchase-price variance	$	6,825	favorable
Increase in materials inventory in December		4,300	kilograms

The direct labor efficiency variance for December, to the nearest dollar, was:

Multiple Choice

• $4,692 favorable.

• $2,988 favorable.

• $7,680 unfavorable.

• $59,850 unfavorable.

Kennedy Inc. has the following data for its operation in August:

Increase in direct materials inventory		100	Sets
Direct materials purchased (AQ)		1,600	Sets
Finished goods manufactured		700	units
Direct materials purchase-price variance	$	624	Favorable
Budgeted
Finished goods to manufacture		800	Units
Direct materials purchases		2,000	Sets
Direct materials per unit of finished goods		2	Sets
Direct materials price per set (SP)	$	5.00

What was the direct materials usage variance in August, rounded to the nearest dollar?

Multiple Choice

• $250 unfavorable.

• $500 unfavorable.

• $750 favorable.

• $750 unfavorable.

• $1,000 unfavorable.