Question 8

Milar Corporation makes a product with the following standard costs:

	Standard Quantity or Hours			Standard Price or Rate
Direct materials		7.7	pounds	$	4.00	per pound
Direct labor		0.1	hours	$	20.00	per hour
Variable overhead		0.1	hours	$	4.00	per hour

In January the company produced 2,000 units using 16,060 pounds of the direct material and 210 direct labor-hours. During the month, the company purchased 16,900 pounds of the direct material at a cost of $65,910. The actual direct labor cost was $4,473 and the actual variable overhead cost was $756.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The materials price variance for January is:

		$1,690 U
		$1,540 F
		$1,540 U
		$1,690 F