Question
Totes to Go, Inc. developed standard costs for direct material and direct labor. The following information is from the static budget for 2018: Expected production
Totes to Go, Inc. developed standard costs for direct material and direct labor. The following information is from the static budget for 2018:
Expected production and sales | 7,000 units |
Expected selling price per unit | $ 680 |
Total fixed costs | $1,400,000 |
In 2018, Totes estimated the following standard costs for one of its major product, the canvas tote bag
| Standard Quantity | Standard Price | Standard Unit Cost |
Direct materials | 10 pounds | $ 8 per pound | $ 80 |
Direct manufacturing labor | 3.7 hours | $50 per hour | $185 |
During 2018, the actual number of units produced and sold was 4,800, at an average selling price of $720. The actual cost of direct materials used was $392,700, based on 66,000 pounds purchased at $5.95 per pound. Direct manufacturing labor-hours actually used were 18,300, at the rate of $48 per hour. As a result, actual direct manufacturing labor costs were $878,400. Actual fixed costs were $1,170,000. There were no beginning or ending inventories.
What is the direct materials Static budget variance?
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