Question
The Marina Company has established standards as follows: Direct material: 3 pounds per unit @ $4 per pound = $12 per unit Direct labor: 2
The Marina Company has established standards as follows: Direct material: 3 pounds per unit @ $4 per pound = $12 per unit Direct labor: 2 hours per unit @ $8 per hour = $16 per unit Variable manufacturing overhead: 2 hours per unit @ $5 per hour = $10 per unit Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased.
Units produced | 600 units |
Direct materials used
| 2,000 pounds |
Direct material purchased (3,000 pounds) | $11,400 |
Direct labor cost (1,100 hours) | $9,240 |
Variable manufacturing overhead cost incurred | $5,720 |
The company applies variable manufacturing overhead to products on the basis of standard direct labor-hours.
The materials price variance is: A. $400 U B. $400 F C. $600 F D. $600 U
The labor rate variance is: A. $480 F B. $480 U C. $440 F D. $440 U
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