Waterways Continuing Problem 11 a-g (Part Level Submission)

Waterways Corporation uses very stringent standard costs in evaluating its manufacturing efficiency. These standards are not ideal at this point, but the management is working toward that as a goal. At present, the company uses the following standards.

Materials
Item	Per unit			Cost
Metal		1 lb.			63 per lb.
Plastic		12 oz.			$1.00 per lb.
Rubber		4 oz.			88 per lb.
Direct labor
Item	Per unit			Cost
Labor		15 min.			$8.00 per hr.
Predetermined overhead rate based on direct labor hours = $4.22

The January figures for purchasing, production, and labor are:

The company purchased 235,800 pounds of raw materials in January at a cost of 77 a pound.

Production used 235,800 pounds of raw materials to make 119,000 units in January.

Direct labor spent 18 minutes on each product at a cost of $7.80 per hour.

Overhead costs for January totaled $53,651 variable and $77,000 fixed.

Answer the following questions about standard costs.

(a)

What is the materials price variance? (Round per unit calculations to 2 decimal places, e.g. 1.25 and final answer to 0 decimal places, e.g. 125.)

Materials price variance

$

UnfavorableNeither favorable nor unfavorableFavorable

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