Doogan Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 2.0 grams $ 7.00 per gram Direct labor 1.6 hours $ 14.00 per hour Variable overhead 1.6 hours $ 2.00 per hour The company produced 4,600 units in January using 10,220 grams of direct material and 2,200 direct labor-hours. During the month, the company purchased 10,790 grams of the direct material at $7.40 per gram. The actual direct labor rate was $14.50 per hour and the actual variable overhead rate was $1.70 per hour. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for January is:

a. $7,548 U

b. $7,548 F

c. $7,140 F

d. $7,140 U

Question

Reginald Bass

Business

6 August, 06:17

Doogan Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 2.0 grams $ 7.00 per gram Direct labor 1.6 hours $ 14.00 per hour Variable overhead 1.6 hours $ 2.00 per hour The company produced 4,600 units in January using 10,220 grams of direct material and 2,200 direct labor-hours. During the month, the company purchased 10,790 grams of the direct material at $7.40 per gram. The actual direct labor rate was $14.50 per hour and the actual variable overhead rate was $1.70 per hour. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for January is:

a. $7,548 U

b. $7,548 F

c. $7,140 F

d. $7,140 U

+3

Answers (1)

Know the Answer?

Eli Patrick · Answer 1

The correct answer is D.

Explanation:

Giving the following information:

Standard Quantity = 2 grams

Standard price = $7.00 per gram

The company produced 4,600 units.

Actual quantity = 10,220 grams

To calculate the direct material quantity variance, we need to use the following formula:

Direct material quantity variance = (standard quantity - actual quantity) * standard price

Direct material quantity variance = (4,600*2 - 10,220) * 7

Direct material quantity variance = $7,140 unfavorable

It is unfavorable because the company used more material to produced 4,600 units than estimated.