The company uses standard costs to prepare its flexible budget. For the companys first quarter of 20x8, direct material and direct labor standards for one of their most popular frames were as follows: Materials: 1.5 board feet per unit; $4.00 per board foot Labor: 2.0 hours per unit; $18.00 per hour During the first quarter, they produced 5,000 units of this product. At the end of the quarter, an examination of the materials records showed that the company used 7,000 board feet of materials, and the direct materials cost variance was $1,750 U. Which of the following would be a logical explanation for this variance?

Multiple Choice

• The company used more labor hours than allowed by the standards.

• The company used a greater quantity of materials than allowed by the standards.

• The company paid a higher rate for labor than allowed by the standards.

• The company paid a higher price for the materials than allowed by the standards.

• None of the answers is correct.