Question
Shelix Corp makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 3.5 grams 1.00 per gram
Shelix Corp makes a product with the following standard costs:
Standard Quantity or Hours | Standard Price or Rate | |
Direct materials | 3.5 grams | 1.00 per gram |
Direct Labor | 0.7 hours | 11.00 per hour |
Variable Overhead | 0.7 hours | 2.00 per hour |
The company reported the following result concerning this product in August.
Actual output 3000 units
Raw materials used in production 11370 grams
Actual direct labor hours 1910 hours
Purchase of raw materials 12100 grams
Actual price of raw materials purchased 1.20 per gram
Actual direct labor rate 11.40 per hour
Actual variable overhead rate 2.10 per hour
The company applies variable overhead on the basis of direct labor hours. The direct materials purchase variance is computed when the materials are purchased.
The material quantity variance for August is:
A) 1044 Favorable
B) 1044 Unfavorable
C) 870 Favorable
D) 870 Unfavorable
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