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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
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 In-process ending inventory-80% complete as to labor Units completed during the period Budgeted output Purchases of materials (in kilograms) Total actual direct labor cost incurred Direct labor hours worked (AQ) Materials purchase-price variance Increase in materials inventory in December None 1,010 units 6,800 units 7,350 units 42,500 $537,030 27,000 hours $ 3,825 favorable 2,800 kilograms The direct materials usage variance for December, to the nearest dollar, was: Multiple Choice $7,800 unfavorable. X $65,400 favorable. $65,400 unfavorable. $7,800 favorable
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