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Sitka Industries uses a cost system that carries direct materials inventory at a standard cost. The controller has established these standards for one ladder (unit):
Sitka Industries uses a cost system that carries direct materials inventory at a standard cost. The controller has established these standards for one ladder (unit): Standard Price Standard Quantity X Direct materials 3 pounds Direct labor 2.00 hours 12.00 per hour $4.40 per pound Standard = Cost $13.20 Total cost 24.00 $37.20 Sitka Industries made 3,000 ladders in July and used 8,800 pounds of material to make these units. Sitka Industries bought 15,500 pounds of material in the current period. There was a $200 unfavorable direct materials price variance. Enter all amounts as positive numbers. A. How much in total did Sitka pay for the 15,500 pounds? Amount paid 68,110 X B. What is the direct materials quantity variance? Direct materials quantity variance $ 880 Favorable C. What is the total direct materials cost variance? Total direct materials cost variance $ 680 Favorable D. What if 9,400 pounds were used to make these ladders, what would be the direct materials quantity variance? Direct materials quantity variance $ Unfavorable E. If there was a $340 favorable direct materials price variance, how much did Sitka pay for the 15,500 pounds of material? Amount paid $ 68,798.3 X Feedback Check My Work A. Find the total amount using the standard price and factoring in the unfavorable direct materials price variance. B. Compare the pounds used against the 'standard quantity'. Multiply the difference by the standard price. C. The direct materials quantity variance is adjusted for the unfavorable direct materials price variance. D. The standard quantity is compared to the suggested pounds for the 'what if' scenario. The difference is multiplied by the standard price to determine the direct materials quantity variance. E. Would the favorable direct materials price variance be added or subtracted from the total cost of the materials bought? (HINT: Consider the effect of favorable and unfavorable amounts. One is added and one is subtracted)
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